Question

In: Accounting

Arco Company produces sporting equipment. In 2015, the first year of operations, Arco planned and produced...

Arco Company produces sporting equipment. In 2015, the first year of operations, Arco planned and produced 27,000 units and sold 16,000 units. In each year, selling price was $100, variable manufacturing costs were $40 per unit, variable selling expenses were $8 per unit, fixed manufacturing costs were $540,000, and fixed administrative expenses were $200,000.

Instructions

  1. a) Prepare an income statement for 2015 using variable costing.

  2. b) Prepare an income statement for 2015 using absorption costing.

  3. c) Reconcile the differences each year in income from operations under the two

costing approaches.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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