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 180,000 units for $7 per unit. Ester Madden is the division manager. She is considering producing either 180,000 or 240,000 units during the period. Other information is as follows:

Division Information for 2020
Beginning inventory		0
Expected sales in units		180,000
Selling price per unit		$7
Variable manufacturing cost per unit		$2.00
Fixed manufacturing cost (total)		$432,000
Fixed manufacturing overhead costs per unit
Based on 180,000 units		$2.40	per unit ($432,000 180,000)
Based on 240,000 units		$1.80	per unit ($432,000 240,000)
Manufacturing cost per unit
Based on 180,000 units		$4.40	per unit ($2.00 variable + $2.40 fixed)
Based on 240,000 units		$3.80	per unit ($2.00 variable + $1.80 fixed)
Variable selling and administrative expenses		$0.30	per unit
Fixed selling and administrative expenses (total)		$10,000

(a)

Prepare an absorption-costing income statement, with one column showing the results if 180,000 units are produced and one column showing the results if 240,000 units are produced.

BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Absorption Costing
Units produced		240,000		180,000
Units sold		180000		180000
Sales		$		$
Less Cost of goods
Gross profit
Less : Selling and administrative expenses
Net income		$		$