Calusa Inc. is a publicly traded company that manufactures retractable water hoses. The

company has asked you to recommend a method of inventory costing. The company will use your recommendation to create the companys monthly income statements. The following data are for the first two months of 2020.

Jan 2020 Feb 2020

Beginning Inventory (in units) -0- 38,000

Production Volume (in units) 120,000 120,000

Sales Volume (in units) 82,000 155,000

Selling Price per Unit 125 125

Variable Manufacturing Costs per hose manufactured 50 50

Variable Advertising Cost per hose sold 35 35 Fixed Manufacturing Overhead Costs 420,000 420,000 Fixed Advertising Costs 105,000 105,000

The company policies used to prepare internal reports for management are closely aligned with the policies used to prepare statements for external users.

prepare:

a) Contribution Margin Statement for each month under variable costing

Calusa Inc.
Contribution Margin Statement
For the First Two Months in 2020
	January 2020		February 2020

b) Income Statement for each month under absorption costing

Calusa Inc.
Income Statement
For the First Two Months in 2020
	January 2020		February 2020