Rocky’s Automotive specializes in performing automobile safety checks. After the company’s first year of operations, its accountant prepared the following summarized data report for the safety checks for 2019:

Required

a. Prepare an income statement based on full absorption costing.

b. Prepare an income statement based on variable costing.

c. Assume that you must decide quickly whether to accept a special one-time order for 20 safety-checks on local police cars for $85 per safety check. Determine the apparent profit or loss on the special order based solely on these data.

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Sales (7,000 safety checks).. $700,000 Production costs (7,010 safety checks): Direct labor. 490,700 Shop overhead: Variable.. Fixed.... Operating expenses: Variable... Fixed.. 112,160 70,100 21,030 16,000