Problem
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
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Inventory, January 31
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8,000
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Manufacturing costs:
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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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Selling and administrative expenses:
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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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Required:
(a) Prepare an income statement using absorption costing.*
(b) Prepare an income statement using variable costing.*
*Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. "Less" or "Plus" will automatically appear if it is required. You will not need to enter colons (:) on the financial statements.
If a net loss is incurred, enter that amount as a negative number using a minus sign.
Absorption Costing Income Statement
Prepare an income statement using absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. "Less" or "Plus" will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.
Prepare an income statement using absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. "Less" or "Plus" will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.
Prepare an income statement using absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. "Less" or "Plus" will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.
Prepare an income statement using variable costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. "Less" or "Plus" will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.