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Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019.

Exercise 19-3 Income reporting under absorption costing and variable costing LO P2

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows.

Manufacturing costs
Direct materials $ 40 per unit
Direct labor $ 60 per unit
Overhead costs
Variable $ 40 per unit
Fixed $ 6,300,000 (per year)
Selling and administrative costs for the year
Variable $ 725,000
Fixed $ 4,750,000
Production and sales for the year
Units produced 105,000 units
Units sold 75,000 units
Sales price per unit $ 360 per unit

1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing.

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Required 1 Required 2 Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement Net income (loss) Required 1 Required 2 Prepare an income statement for the year using absorption costing. SIMS COMPANY Absorption Costing Income Statement Net income (loss)

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