Accenture uses absorption costing for its consulting projects. In July 2044, the following data is provided:

• Fixed Overhead: $3,000,000
• Variable Overhead: $1,000,000
• Direct Materials: $500,000
• Direct Labor: $2,000,000
• Billable Hours: 50,000

Requirements:

• Calculate the overhead absorption rate.
• Prepare income statements using absorption costing.
• Compare absorption costing with variable costing.
• Discuss the implications of each method on financial reporting.