Chataqua Can Company manufactures metal cans used in the food processing industry A case of cans sells for $25 The variable costs of production for one case of cans are as follows Direct material $ 6 50 Direct labor 1 50 Variable manufacturing overhead 6 00 Total variable manufacturing cost per case $ 14 00 Variable selling and administrative costs amount to $0 70 per case Budgeted fixed manufacturing overhead is $492,000 per year, and fixed selling and administrative cost is $41,500 per year The following data pertain to the companys first three years of operation Year 1 Year 2 Year 3 Planned production (in units) 82,000 82,000 82,000 Finished goods inventory (in units), January 1 0 0 24,000 Actual production (in units) 82,000 82,000 82,000 Sales (in units) 82,000 58,000 94,000 Finished goods inventory (in units), December 31 0 24,000 12,000 Actual costs were the same as the budgeted costs Required Prepare operating income statements for Chataqua Can Company for its first three years of operations using A Absorption costing B Variable costing Reconcile Chataqua Can Companys operating income reported under absorption and variable costing for each of its first three years of operation Use the shortcut method Complete this question by entering your answers in the tabs below Req 1A Req 1B Reqd 2 Req Req 3B Prepare operating income statements for Chataqua Can Company for its first three years of operations using absorption costing Year 1 Year 2 Year 3 Sales revenue $ 2,050,000 $ 1,450,000 $ 2,350,000 Less Cost of goods sold $ 2,050,000 $ 1,450,000 $ 2,350,000 Selling and Administrative Expenses $ 2,050,000 $ 1,450,000 $ 2,350,000 Req 1A Req 1B Reg 1A Req 1B Reqd 2 Req Req 3B Prepare operating income statements for Chataqua Can Company for its first three years of operations using variable costing Year 1 Year 2 Year 3 Variable expenses 0 $ 0 $ 0 Fixed expenses 0 $ 0 $ 0 Req 1A Reqd 2 Complete this question by entering your answers in the tabs below Req 1A Reg 1B Reqd 2 Req 3A Req 3B Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each years of operation Use the shortcut method Year Change in inventory (in units) Predetermined fixed overhead rate Difference in fixed overhead expensed under absorption and variable costing 1 2 3 Req 1B Req 3A

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Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $25. The variable costs of production for one

Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $25. The variable costs of production for one case of cans are as follows:


Direct material	$	6.50
Direct labor		1.50
Variable manufacturing overhead		6.00
Total variable manufacturing cost per case	$	14.00

Variable selling and administrative costs amount to $0.70 per case. Budgeted fixed manufacturing overhead is $492,000 per year, and fixed selling and administrative cost is $41,500 per year. The following data pertain to the companys first three years of operation.

	Year 1	Year 2	Year 3
Planned production (in units)	82,000	82,000	82,000
Finished-goods inventory (in units), January 1	0	0	24,000
Actual production (in units)	82,000	82,000	82,000
Sales (in units)	82,000	58,000	94,000
Finished-goods inventory (in units), December 31	0	24,000	12,000

Actual costs were the same as the budgeted costs.

Required:

Prepare operating income statements for Chataqua Can Company for its first three years of operations using:
A. Absorption costing.

B. Variable costing.

Reconcile Chataqua Can Companys operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method.

Complete this question by entering your answers in the tabs below. Req 1A Req 1B Reqd 2 Req Req 3B Prepare operating income statements for Chataqua Can Company for its first three years of operations using absorption costing. Year 1 Year 2 Year 3 Sales revenue $ 2,050,000 $ 1,450,000 $ 2,350,000 Less: Cost of goods sold $ 2,050,000 $ 1,450,000 $ 2,350,000 Selling and Administrative Expenses $ 2,050,000 $ 1,450,000 $ 2,350,000 Req 1A Req 1B Reg 1A Req 1B Reqd 2 Req Req 3B Prepare operating income statements for Chataqua Can Company for its first three years of operations using variable costing. Year 1 Year 2 Year 3 Variable expenses: 0 $ 0 $ 0 Fixed expenses: 0 $ 0 $ 0 Req 1A Reqd 2 Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reqd 2 Req 3A Req 3B Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each years of operation. Use the shortcut method. Year Change in inventory (in units) Predetermined fixed overhead rate Difference in fixed overhead expensed under absorption and variable costing 1 2 3 Req 1B Req 3A