Question - On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:
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Units
|
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Production
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50,000
|
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Sales ($18 per unit)
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42,000
|
|
Inventory, January 31
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8,000
|
|
|
|
Manufacturing costs:
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|
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Variable
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$575,000
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Fixed
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80,000
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Total
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$655,000
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|
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Selling and administrative expenses:
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|
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Variable
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$ 35,000
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Fixed
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10,500
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Total
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$ 45,500
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|
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Required -
(a) Prepare an income statement using absorption costing.
(b) Prepare an income statement using variable costing.