Variable and Absorption Costing with High-Low Cost Estimation and CVP Analysis Including Taxes Presented are the Charger Company’s functional income statements for January and February of 2017.

Required

a. Using the high-low method (see Chapter 2), develop a cost estimating equation for total monthly manufacturing costs.
Determine Charger Company’s monthly break-even point.
Determine the unit sales required to earn a monthly after-tax income of $175,000.
Prepare a January 2017 contribution income statement using variable costing.
If the January 2017 net income amounts differ using absorption and variable costing, explain why.
If they are identical, explain why.

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CHARGER COMPANY Functional (Absorption Costing) Income Statements For the Months of January and February 2017 Production and sales.. Sales Revenue..... Cost of goods manufactured and sold... Gross profit.. General and administrative expenses Net income before taxes Income taxes at 0.35... Net income after taxes.. January February 40,000 50,000 $1,000,000 $1,250,000 (525,000) (625,000) 475,000 625.000 (235,000) (235,000) 240,000 390,000 (84,000) (136,500) 156,000 $ 253,500