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During Durton Company's first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two
During Durton Company's first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two years are given: Year 1 Year 2 Units produced 25,000 25,000 Units sold 20,000 30,000 Year 1 Year 2 Sales (at $50 per unit) $1,000,000 $1,500,000 Variable expenses: Variable cost of goods sold (at $20 per unit) 400.000 600,000 Variable selling and administrative costs (at $3 per unit) 60.000 90,000 Total variable expenses 460.000 690,000 Contribution margin 540.000 810,000 Fixed expenses: Fixed manufacturing overhead 350,000 350,000 Fixed selling and administrative 250,000 250,000 Total fixed expenses 600,000 600,000 Operating income (loss) $ (60,000) $ 210,000 The company's $20 unit product cost is computed as follows: Direct materials $ 8 Direct labour 10 Variable manufacturing overhead 2 Unit product cost $20 Prepare an absorption costing income statement for Year 1
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