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 2016:

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 $80 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) Production costs (7,010 safety checks): Direct labor..... Shop overhead: Variable.. Fixed..... Operating expenses: Variable. Fixed. 20 $700,000 490,700 112,160 70,100 21,030 16,000