The following information is for the Rue Company’s first year of operation when it produced 20,000 units:

Required:

a. Determine income without preparing a formal income statement, using:
(1) Absorption costing.
(2) Variable costing.

b. Explain the differences in absorption costing income and variable costing income.

Transcribed Image Text:

Sales ($40 per unit) $720,000 Total fixed production cost 80.000 Total variable production cost 400,000 Total variable marketing and administrative costs 120,000 Total fixed marketing and administration costs 60,000