The following absorption costing income statement and additional data are available from the accounting records of Bernon Co. for the month ended May 31, XXXX. During the accounting period, 17,000 units were manufactured and sold at a price of $60 per unit. There were no beginning inventories.
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Bernon Co. Absorption Costing Income Statement for the Month Ended May 31, XXXX
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Sales (17,000 @ $60)
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$1,020,000
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Cost of goods sold
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612,000
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Gross profit
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$ 408,000
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Selling and administrative expenses
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66,000
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Income from operations
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$ 342,000
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Additional Information:
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Cost
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Total Cost
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Number of Units
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Unit Cost
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Manufacturing costs:
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Variable
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$442,000
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17,000
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$26
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Fixed
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170,000
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17,000
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10
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Total
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$612,000
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$36
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Selling and administrative expenses:
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Variable ($2 per unit sold)
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$34,000
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Fixed
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32,000
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Total
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$66,000
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Required: Prepare a new income statement for the year using variable costing. Comment on the differences, if any, between the absorption costing and the variable costing income statements.