Blue Spruce Company produces plastic that is used for injection-moulding applications such as gears for small motors. In 2022, the first year of operations, Blue Spruce Company produced 4,300 tonnes of plastic and sold 3,225 tonnes. In 2023, the production and sales results were exactly reversed. In each year, the selling price per tonne was $2,000; variable manufacturing costs were 18% of the sales price for the units produced; variable selling expenses were 12% of the selling price of the units sold; fixed manufacturing costs were $3,225,000; and fixed administrative expenses were $520,300.

Your answer is correct. Prepare comparative income statements for each year using variable costing. (Use the format from Illustration 8.5.) BLUE SPRUCE COMPANY Income Statement-Variable Costing For the Years Ended December 31 2022 2023 Number of units manufactured 4300 3225 Number of units sold 3225 4300 Sales $ 6450000 $ 8600000 Less Variable costs Inventory, beginning 0 387000 Add Costs of goods manufactured 1548000 i 1161000 Cost of goods available for sale 1548000 i 1548000 Less V: Inventory, ending 387000 i 0 Variable cost of goods sold 1161000 i 1548000 Variable selling and administrative costs 774000 i 1032000 Total variable costs 1935000 i 2580000 Contribution margin 4515000 6020000 Less Fixed costs 3745300 i 3745300 1 Net income 769700 $ 2274700 Prepare comparative income statements for each year using absorption costing. (Use the format from Illustration 8.4.) BLUE SPRUCECOMPANY Income Statement-Absorption Costing For the Years Ended December 31 2022 2023 Number of units produced 4300 3225 Number of units sold 3225 4300 Sales $ 6450000 $ 8600000 Less : Cost of goods sold Inventory, beginning 0 Add V: Costs of goods manufactured 1548000 Cost of goods available for sale 1548000 Less V: Inventory, ending 387000 0 Cost of goods sold Gross margin Less : Selling and administrative costs Net income $ $