Question:
Patagucci Inc. manufactures and sells athletic equipment. The company began operations on August 1, 2012, and operated at 100% of capacity (66,000 units) during the first month, creating an ending inventory of 6,000 units. During September, the company produced 60,000 garments during the month but sold 66,000 units at $165 per unit. The September manufacturing costs and selling and administrative expenses were as follows: Variable costing for management analysis:
(a) Prepare an income statement according to the absorption costing concept for September.
(b) Prepare an income statement according to the variable costing concept for September.(2346,000)
(c) What is the reason for the difference in the amount of income from operations reported in (a) and(b)?