Comparing Full Absorption and Variable Costing
Consider the following information for Presidio Inc.'s most recent year of operations. Additional information for Presidio's most recent year of operations follows:
Number of units produced 2,000
Number of units sold 1,300
Sales price per unit $ 650.00
Direct materials per unit 60.00
Direct labor per unit 90.00
Variable manufacturing overhead per unit 40.00
Fixed manufacturing overhead per unit ($235,000 ÷ 2,000 units) 117.50
Total variable selling expenses ($10 per unit sold) 13,000.00
Total fixed general and administrative expenses 70,000.00
Required :
1. Complete a full absorption costing income statement and a variable costing income statement for Presidio. Assume there was no beginning inventory.
2. Compute the difference in profit between full absorption costing and variable costing.