In: Accounting
Sims Company, a manufacturer of tablet computers, began
operations on January 1, 2017. Its cost and...
Sims Company, a manufacturer of tablet computers, began
operations on January 1, 2017. Its cost and sales information for
this year follows.
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Manufacturing costs |
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Direct materials |
$ |
35 |
per unit |
Direct labor |
$ |
55 |
per unit |
Overhead costs for the year |
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Variable overhead |
$ |
2,100,000 |
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Fixed overhead |
$ |
8,400,000 |
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Selling and administrative costs for the year |
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Variable |
$ |
800,000 |
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Fixed |
$ |
4,750,000 |
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Production and sales for the year |
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Units produced |
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105,000 |
units |
Units sold |
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75,000 |
units |
Sales price per unit |
$ |
360 |
per unit |
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1. Prepare an income statement for the year using
variable costing.
2. Prepare an income statement for the year using
absorption costing.
3. Under what circumstance(s) is reported income
identical under both absorption costing and variable costing?
Prepare an income statement for the year using variable
costing.
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SIMS COMPANY |
Variable Costing Income Statement |
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Net income (loss) |
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Prepare an income statement for the year using absorption
costing.
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SIMS COMPANY |
Absorption Costing Income
Statement |
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Net income (loss) |
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Under what circumstance(s) is reported income identical under
both absorption costing and variable costing?
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Reported income identical under
both |
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