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Estimated income statements, using absorption costing and variable costing Prior to the first month of operations ending April 30, 2012, Jadelis Industries Inc. estimated the

Estimated income statements, using absorption costing and variable costing

Prior to the first month of operations ending April 30, 2012, Jadelis Industries Inc. estimated the following operating results:

Sales (24,000 x $83) $1,992,000
Manufacturing costs (24,000 units):
Direct materials 1,204,800
Direct labor 285,600
Variable factory overhead 132,000
Fixed factory overhead 158,400
Fixed selling and administrative expenses 43,100
Variable selling and administrative expenses 52,100

The company is evaluating a proposal to manufacture 26,400 units instead of 24,000 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

1. Prepare an estimated income statement, comparing operating results if 24,000 and 26,400 units are manufactured in the absorption costing format.

2. Prepare an estimated income statement, comparing operating results if 24,000 and 26,400 units are manufactured in the variable costing format.

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