Question

Exercise 19-5 Absorption costing and variable costing income statements LO P2 Rey Company's single product sells at a price of $230 per unit. Data for its single product for its first year of operations follow. 34 per unit 42 per unit Direct materials Direct labor Overhead costs Variable overhead Fixed overhead per year Selling and administrative expenses Variable Fixed Units produced and sold 10 per unit $ 318,000 per year $ 32 per unit 32 pe $ 228,000 per year 26,580 units 1. Prepare an income statement for the year using absorption costing 2. Prepare an income statement for the year using variable costing. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using absorption costing. REY COMPANY Absorption Costing Income Statement . Net income (loss) Required 2 >

Answer 1

6,095,000 peal REY COMPANY Absorption costing Income statement (26 500 X 82307 I S Less: cost of Good sold: DireCH materials ( $ 34 X 26500) $ 901,000 Direct labor ($ 42 x 26500) 1,113,000 variable OH costs ($10 X 26500 2 65000 fixed overhead costs 318000 cost of Good sold (2597000) Gruss margin $ 3498,000 selling general e admin eXP: - variable selling & Alm EXP ($32X 26500) 848000 - fixed selling & Admin cost 228000 TOTO/ selling, general e admin cost Net Income ILLOSS) (1,076,000 $ 2,422,000

6,095,000 Reg.2 REY COMPANY variable costing Income statement sales $ Less: variable costs - Didech material $ 901,000 bidech labor 1,113,000 Nariable oH costs 265000 Variable sellinge Admin 848000 FC 3,127,000) $ 2,968,000 TOTCH variable costs contribution margin Less: fixed expense - Fixed OH costs - fixed selling & Admin cost $ 318000 228000 Torol fixed expense Net Income / CLOSS) (546000) $ 2, 422,000