Connect CSecure https//newconnect.mheducation.com/flow/connect.html Ch 06 Ex 6-5

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Connect CSecure https//newconnect.mheducation.com/flow/connect.html Ch 06 Ex 6-5 6 Help Save& Exit Submit Saved my work Exercise 6-5 Absorption costing and variable costing income statements LO P2 Rey Company's single product sells at a price of $235 per unit. Data for its single product for its first year of operations follow points Direct materials Direct labor Overhead cost:s 39 per unit 47 per unit eBook Variable overhead Fixed overhead per year 5 per unit $168,890 per year Hint Selling and administrative expenses Ask Variable Fixed 37 per unit 5 238,080 per year Print Units produced and sold 24,800 units 1. Prepare an income statement for the year using absorption costing 2. Prepare an income statement for the year using variable costing. Complete this question by entering your answers in the tabs below Required 1Required 2 Prepare an income statement for the year using absorption costing Graw Prev 1ofl Next 946 PM O Type here to search 4/27/2018

Explanation / Answer

SOLUTION

(A)

REY COMPANY

Absorption Costing Income Statement

(B)

REY COMPANY

Variable Costing Income Statement

Amount ($) Amount ($) Sales (24,000 * $235) 5,640,000 Less: Cost of goods sold Direct materials (24,000 * $39) 936,000 Direct labor (24,000 * $47) 1,128,000 Variable overhead costs (24,000 * $5) 120,000 Fixed overhead costs 168,000 Cost of goods sold 2,352,000 Gross margin 3,288,000 Selling general and administrative expenses- Fixed selling and administrative costs 238,000 Variable selling and administrative expenses (24,000 * $37) 888,000 Total selling, general and administrative expenses 1,126,000 Net income (loss) 2,162,000

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