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Basic Electric Motors is a division of Basic Electric Products Corporation. The division manufactures and sells an electric switch used in a wide variety of
Basic Electric Motors is a division of Basic Electric Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 190.000 units for $3 per unit. Ester Madden is the division manager. She is considering producing either 190,000 or 250,000 units during the period. Other information is as follows: Division Information for 2020 Beginning inventory 0 Expected sales in units 190.000 Selling price per unit $8 Variable manufacturing cost per unit $2.90 Fixed manufacturing cost (total) $475,000 Fixed manufacturing overhead costs per unit Based on 190,000 units $2.50 per unit ($475,000 = 190,000) Based on 250,000 units $1.90 per unit($475,000 = 250,000) Manufacturing cost per unit Based on 190.000 units $5.40 per unit ($2.90 variable + $2.50 fixed) Based on 250,000 units $4.80 per unit ($2.90 variable + $1.90 fixed) Variable selling and administrative expenses $0.50 per unit Fixed selling and administrative expenses (total) $11,300 Prepare an absorption costing income statement, with one column showing the results if 190.000 units are produced and one column showing the results if 250,000 units are produced. BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Absorption Costing Units produced 250,000 190,000 Units sold 1520000 1520000 Sales $ $ Less Cost of goods sold Gross profit Less Selling and administrative expenses Gross profit $ (b) Prepare a variable-costing income statement, with one column showing the results if 180,000 units are produced and one column showing the results if 280,000 units are produced. BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Variable Costing Units produced 280,000 180,000 Units sold
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