Converting absorption costing to a variable costing statement The Orlando Company makes a single product and has normal capacity of 30,000 units. Beginning inventory cost contained $19 per unit of fixed manufacturing overhead cost. Below is an absorption costing income statement for the year just completed.

REQUIRED

a. Calculate the number of units produced during the year.

b. Calculate the number of units in ending inventory.

c. Prepare a variable costing income statement in good form for the Orlando Company.

d. Reconcile the net income for the year between the absorption and variable costing income statements.

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Sales (33,000 units @ $90) Less cost of goods sold* ORLANDO COMPANY Absorption Costing Income Statement For the Year Ending December 31, 1993 Gross margin.... Less operating expenses: Variable selling and administrative Fixed selling and administrative Total operating expenses.... Net income *Cost of goods sold: Beginning inventory (11,000 units @ $60 per unit) Current year (22,000 units @ $62 per unit) ..... Underapplied fixed MOH (2,000 units @ $20 per unit) Cost of goods sold for the year... $2,970,000 2,064,000 906,000 $256,000 385,000 641,000 $ 265,000 $ 660,000 1,364,000 40,000 $2,064,000