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Adeline Manufacturing manufactures a single product. Cost, sales, and production information for the company and its single product is as follows: Sales price per

Adeline Manufacturing manufactures a single product. Cost, sales, and production information for the company and its single product is as follows:


Sales price per unit $40

Variable manufacturing costs per unit manufactured (DM, DL and variable MOH) $21

Variable operating expenses per unit sold $1

Fixed manufacturing overhead (MOH) in total for the year $160,000

Fixed operating expenses in total for the year $49,000

Units manufactured during the year 16,000
units

Units sold during the year 12,500
units


1.
Prepare an income statement for the upcoming year using variable costing.
2.
Prepare an income statement for the upcoming year using absorption costing.
3.
What causes the difference in income between the two methods?


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