1. Appliance Apps has the following costs associated with its production and sale of devices that allow appliances to receive commands from cell phones.

   Beginning Inventory	0
   Units Produced	24,000
   Units Sold	19,200
   Selling Price per Unit	$145
   Variable Sales and Administration Expenses	$5
   Fixed Sales and Administration Expenses	$936,000
   Direct Material Cost per Unit	$25
   Direct Labor Cost per Unit	$10
   Variable Manufacturing Overhead Cost per Unit	$4
   Fixed Manufacturing Overhead Cost per Month	$938,400

   Prepare an income statement under the absorption method. If an amount box does not require an entry, leave it blank.

   Appliance Apps
   Income Statement: Absorption
   Sales Cost of Goods Sold Miscellaneous Expenses Operating Expenses Sales Variable Costs		$
   Cost of Goods Sold:
   Beginning Inventory Beginning Inventory Ending Inventory Miscellaneous Expenses Operating Expenses Sales	$
   Cost of Goods Manufactured Cost of Goods Manufactured Miscellaneous Expenses Operating Expenses Sales Variable Costs
   Cost of Goods Available for Sale Cost of Goods Available for Sale Miscellaneous Expenses Operating Expenses Sales Variable Costs	$
   Ending Inventory Beginning Inventory Ending Inventory Miscellaneous Expenses Operating Expenses Sales
   Total Cost of Goods Sold
   Gross Profit Beginning Inventory Contribution Margin Gross Profit Net Operating Income Net Profit		$
   Sales and Administrative Expenses:
   Variable	$
   Fixed
   Total Fixed Sales and Administrative Expenses Add: Beginning Inventory Contribution Margin Ending Inventory Total Fixed Sales and Administrative Expenses Less: Beginning Inventory
   Net Operating Income Beginning Inventory Contribution Margin Gross Profit Net Operating Income Net Operating Loss		$

   Prepare an income statement under the variable costing method. If an amount box does not require an entry, leave it blank.

   Appliance Apps
   Income Statement: Variable
   Sales Cost of Goods Sold Miscellaneous Expenses Operating Expenses Sales Variable Costs		$
   Cost of Goods Sold:
   Beginning Inventory Beginning Inventory Ending Inventory Miscellaneous Expenses Operating Expenses Sales	$
   Cost of Goods Manufactured Cost of Goods Manufactured Miscellaneous Expenses Operating Expenses Sales Variable Costs
   Cost of Goods Available for Sale Cost of Goods Available for Sale Miscellaneous Expenses Operating Expenses Sales Variable Costs	$
   Ending Inventory Beginning Inventory Ending Inventory Miscellaneous Expenses Operating Expenses Sales
   Total Cost of Goods Sold
   Gross Contribution Margin Beginning Inventory Contribution Margin Gross Contribution Margin Net Operating Income Net Profit		$
   Sales and Administrative Expenses:
   Variable
   Contribution Margin Beginning Inventory Contribution Margin Gross Contribution Margin Net Operating Income Net Profit		$
   Fixed Sales and Administrative Expenses Fixed Sales and Administrative Expenses Miscellaneous Expenses Operating Expenses Rent Expense Sales	$
   Fixed Manufacturing Fixed Manufacturing Miscellaneous Expenses Operating Expenses Rent Expense Sales
   Total Fixed Sales and Administrative Expenses Add: Beginning Inventory Contribution Margin Ending Inventory Total Fixed Sales and Administrative Expenses Less: Beginning Inventory
   Net Operating Income Beginning Inventory Contribution Margin Gross Profit Net Operating Income Net Operating Loss		$

   Prepare a reconciliation between the two statements.

   Reconciliation
   Beginning Inventory Contribution Margin Gross Profit Net Income under Absorption Net Income under Variable Costing	$
   Add: Beginning Inventory Add: Fixed Manufacturing Overhead Deferred Less: Contribution Margin Less: Fixed Manufacturing Overhead Deferred Less: Net Income under Absorption
   Contribution Margin Net Income under Absorption Net Income under Variable Costing Net Loss under Absorption Net Loss under Variable Costing	$