Question: Midias Mechanical Company reconditions motors for Drift Racing cars. They bought a shipping container of 500 motors from Japan (model number ZF290) for $1,000,000. The reconditioning cost of each motor is $900 and the recomputing cost of each motor is $700. Commission on sales was paid to the head mechanic of Race Teams, at $80 per motor.
The average sale price of a ZF290 motor is $11,000. Administrative costs was $88,500 each year. In 2017, Midias Mechanical Company sold 100 motors and in 2018 sold 250 motors.
Requirement: 1. Prepare Absorption Income Statement for 2017
2. Prepare Absorption Income Statement for 2018
3. Prepare Variable Income Statement for 2017
4. Prepare Variable Income Statement for 2018
Note: you are required to show your workings