Dilithium Batteries is a division of Enterprise Corporation. The division manufactures and sells a long-life battery used in a wide variety of applications. During the coming year, it expects to sell 60,000 units for $30 per unit. Nyota Uthura is the division manager. She is considering producing either 60,000 or 90,000 units during the period. Other information is presented in the schedule. (a) $47,175 (c) (2) 3.37 Prepare income statements under absorption costing and variable costing for a company with beginning inventory, and reconcile differences. (LO 5), AN (a) 2017 $2,700,000 (b) 2017 $2,350,000 Prepare absorption and variable costing income statements and reconcile differences between absorption and variable costing income statements when sales level and production level change. Discuss relative usefulness of absorption costing versus variable costing. (LO 5), AN Division Information for 2017 Beginning inventory 0 Expected sales in units 60,000 Selling price per unit $30 Variable manufacturing costs per unit $12 Fixed manufacturing overhead costs (total) $540,000 Fixed manufacturing overhead costs per unit: Based on 60,000 units $9 per unit ($540,000 60,000) Based on 90,000 units $6 per unit ($540,000 90,000) Manufacturing costs per unit: Based on 60,000 units $21 per unit ($12 variable + $9 fixed) Based on 90,000 units $18 per unit ($12 variable + $6 fixed) Variable selling and administrative expenses $2 Fixed selling and administrative expenses (total) $50,000

Instructions:

(a) Prepare an absorption costing income statement, with one column showing the results if #REF! units are produced and

one column showing the results if #REF! units are produced.

DILITHIUM BATTERIES DIVISION

Income Statement

For the Year Ended December 31, 2017

Absorption Costing

#REF! #REF!

Sales Formula Formula

Cost of goods sold Formula

Formula

Title Formula Formula

Title

Formula Formula

Title Amount Amount

Net income Formula Formula

(b) Prepare a variable costing income statement, with one column showing the results if #REF! units are produced and

one column showing the results if #REF! units are produced.

DILITHIUM BATTERIES DIVISION

Income Statement

For the Year Ended December 31, 2017

Variable Costing

#REF! #REF!

Sales Formula Formula

Title Formula Formula

Title Formula Formula

Title

Formula Formula

Title Formula Formula

Title Amount Amount

Title Amount Amount

Net income Formula Formula

(c) Reconcile the difference in net incomes under the two approaches and explain what accounts for this difference.

Enter text answer here.

Net income under absorption costing Amount

Less Amount

Title Formula

(d) Discuss the relative usefulness of the variable costing income statements versus the absorption costing income statements for decision making and for evaluating the managers performance.