Exercise 6-7 Income reporting under absorption costing and variable costing LO P2 [The following information applies to the questions displayed below] Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 310 per unit Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs 110,000 units 113,250 units 3.250 units $ 438,750 Variable (3.250 units x $135) Fixed (3.250 units $80) Total Direct materials $ 698.750 Manufacturing costs this year 48 per unit S64 per unit Direct labor Overhead costs this year Variable overhead Fixed overhead $7.200,00o Selling and adminstrative costs this year Variable Fixed $1,350,000 4,000,000 OAK MART COMPANY Absorption Costing Income Statement S 35,107,500 Sales Less: Cost of goods sold $ 438,750 Beginning inventory Manufacturing costs this year 438,750 260,000 Direct materials Direct labor Variable overhead costs Fixed overhead costs Less: Ending inventory Cost of goods sold Gross margin Selling general and administrative expenses 1,137,500 Fixed selling and administrative costs Variable selling and administrative expenses Net income (loss) Net income under variable costing is higher than net income under absorption costing by: OAK MART COMPANY Variable Costing Income Statement Sales 35,107,500 Beginning inventory Variable costs S 438,750 Manufacturing costs this year 5,280,000 704,000 0 6.422,750 Direct materials Direct labor Less: Variable costs Variable overhead costs Variable selling and administrative expenses 3.200,000 9,622,750 Total variable costs 12.822,750 22.284,750 Contribution margin