Absorption and variable costing income statements Spaulding Manufacturing Co. has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year $ 5 Direct materials.. Direct labor Variable factory overhead............ Fixed factory overhead............ Total cost.. Operating statistics for March and April include the following $15 March April Units produced...................... 12,000 8,000 Units sold.......... 8,000 12,000 Selling and administrative expenses (all fixed).. $12,000 $12,000 The selling price is $20 per unit. There were no inventories on March 1, and there is no work in process on April 30 Required Prepare comparative income statements for each month under each of the following Biscayne Industries Income Statement For the Month Ended March 31, 20- (1) Sales (8,000 units) Cost of goods sold Absorption Costing $ 160,000 180,000 60,000 120.000 51,000 Variable Costing $ 240,000 180,000 $ Gross margin Manufacturing margin Fixed factory overhead Selling and administrative expenses Net income (loss) $ 16,000 * Calculation of overapplied fixed factory overhead Fixed overhead per year + 12 = Fixed overhead per month 300.000 25.000! 7 Fixed factory overhead applied to production Fixed factory overhead per month Fixed factory overhead over(under)applied 11.000 WO Biscayne Industries Income Statement For the Month Ended April 30, 20.. (1) Biscayne Industries Income Statement For the Month Ended April 30, 20-- (2) Variable Costing Absorption Costing Sales (12,000 units) Cost of goods sold .. Gross margin Manufacturing margin Fixed factory overhead Selling and administrative expenses Net income floss) norca ** Calculation of overapplied fixed factory overhead: Fixed factory overhead applied to production Fixed factory overhead per month Fixed factory overhead over under applied