PREPARING INCOME STATEMENTS UNDER ABSORPTION AND VARIABLE COSTING During the most recent year, B&O Cafe had the following data associated with the items it makes:

Units in beginning inventory —

Units produced 17,000 Units sold ($200 per unit) 14,000 Variable costs per unit:

Direct materials $35 Direct labor $65 Variable overhead $30 Fixed costs:

Fixed overhead per unit produced $20 Fixed selling and administrative $200,000 Required:

. Calculate the cost of goods sold under absorption costing.

. Calculate the cost of goods sold under variable costing.

. Prepare an income statement using absorption costing.

. Prepare an income statement using variable costing.

Cornerstone Exercise