1 Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement The demand for aloe vera hand lotion, one of numerous products manufactured by Smooth Skin Care Products Inc., has dropped sharply because of recent competition from a similar product The company's chemists are currently completing tests of various new formulas, and it is anticipated that the manufacture of a superior product can be started on December 1, one month in the future. No changes will be needed in the present production facilities to manufacture the new product because only the mixture of the various materials will be changed. The controller has been asked by the president of the company for advice on whether to continue production during November or to suspend the manufacture of aloe vera hand lotion until December 1. The controller has assembled the tollowing pertinent data: Smooth Skin Care Products Inc Income Statement-Aloe Vera Hand Lotion For the Month Ended October 31, 2016 Sales (400,000 units) 2Cost of goods sold 8 Gross proft 32,000,000.00 8,330,000.00 $3,670,000.00 4,270,000.00 (600,000.00) Selling and administrative expenses Operating loss The production costs and selling and administrative expenses, based on production of 400,000 units in October, are as follows: 1. Prepare an estimated income statement in absorption costing form for November for aloe vera hand lotion, assuming that production continues during the month. Round amounts to two decimals. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A co on : w automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign Question not attempted. Score: 0/98 Smooth Skin Care Products Inc. Estimated Income Statement-Absorption Costing-Aloe Vera Hand Lotion Label) Cost of goods sold Label 10 12 Points:0/23 2. Prepare an estimated income statement in variable costing form for November for aloe vera hand lotion, assuming that production continues during the month. Round amounts to two decimais. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) wi automaticaly appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign Question not attempted. Score: 0/108 Smooth Skin Care Products Inc. Estimated Income Statement-Variable Costing-Aloe Vera Hand Lotion Label) 2 (Labe 10 12 Points:0125