Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank.

Lawn RX provides a quarterly lawn care service that is sold for \($150.\) The variable and fixed cost data are as follows:

During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year.
Required

a. Calculate reported income for management.

b. Calculate reported income for the bank.

c. Reconcile the two income amounts.

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Direct labor. Overhead: Variable cost per unit. Fixed cost..... Marketing, general, and administrative: Variable cost (per contract completed) Administrative expense (fixed) (per month) $ 100.00 $ 5.00 $100,000 $ 6.00 $ 42,000