BUSINESS SOLUTIONS Absorption Costing Income Statements Production volume 300 320 Sales volume - 300 Workstations workstations workstations Sales Cost of goods sold Gross margin Selling general and administrative expenses Net income (loss) 0 $ 0 Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)? margin 2. Complete the following income statements using variable costing. 320 workstations 300 workstations BUSINESS SOLUTIONS Variable Costing Income Statements 300 Production volume (units) workstations Sales volume (units) 300 workstations Sales Less: Variable costs Direct materials Direct labor Variable overhead Variable selling expenses Contribution margin Less: Fixed expenses Fixed overhead costs Fixed selling expenses Fixed selling expenses Net income (loss) Under variable costing, can a company increase its net income by increasing production? Santana Rey expects sales of Business Solutions's line of computer workstation furniture to equal 300 workstations (at a sales price of $3,600 each) for 2018. The workstations' manufacturing costs include the following. Direct materials Direct labor Variable overhead Fixed overhead 740 per unit 380 per unit $ 70 per unit $ 19,200 per year The selling expenses related to these workstations follow. Variable selling expenses Fixed selling expenses $ 50 per unit $3,200 per year Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. Required: 1. Complete the following income statements using absorption costing. Cost of goods sold: Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead per unit Cost of goods sold per unit Number of workstations sold Total cost of goods sold Production volume 300 320 workstations workstations $ 740 $ 740 380 70 70 64 60 $ 1,254 $ 1,250 300 300 | $ 376,200 $ 375,000