Problem - Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and sales information for this year follows.
Manufacturing costs
Direct materials $ 35 per unit
Direct labor $ 55 per unit
Overhead costs for the year
Variable overhead $ 2,100,000
Fixed overhead $ 8,400,000
Selling and administrative costs for the year
Variable $ 775,000
Fixed $ 4,500,000
Production and sales for the year
Units produced 105,000 units
Units sold 75,000 units
Sales price per unit $ 360 per unit
1. Prepare an income statement for the year using variable costing.
2. Prepare an income statement for the year using absorption costing.