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 Direct labor Overhead costs Variable $ $ 35 per unit 55 per unit $ 40 per unit $6,300,000 (per year) Fixed $ 700,000 $5,000,000 Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit 105,000 units 75,000 units 350 per unit $ 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement Sales $ 26,250,000 Less: Variable costs Direct materials OOOOOO Direct labor $ 2,625,000 4,125,000 2,142,857 700,000 Variable overhead costs Variable selling and administrative expenses Total variable costs 9,592,857 15,695,000 Contribution margin Less: Fixed expenses Fixed selling and administrative costs Fixed overhead costs OOOO 5,000,000 6,300,000 Total fixed expenses Net income (loss) 11,300,000 $ 4,395,000 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using absorption costing. SIMS COMPANY Absorption Costing Income Statement Sales $26,250,000 Less: Cost of goods sold Direct materials Direct labor 2,625,000 4,125,000 3,105,000 4,500,000 Variable overhead costs Fixed overhead costs 14,355,000 11,895,000 X Cost of goods sold Contribution margin Selling general and administrative expenses Fixed selling and administrative costs Variable selling and administrative expenses 5,000,000 700,000 Total selling, general and administrative expenses Net income (loss) 5,700,000 $ 6,195,000 X