Fill out the columns for Scenario 2 and Scenario 3

Scenario 2 -

Techlight produced 40,000 units instead of 25,000 units, and sales are 20,000 units in year 1. Inventory is 15,000 units at the end of year 2.

All other information remains the same as the TechLight Part A case. Can you rework their income statement for the two years?

Scenario 3

Techlight decided to follow a different system for internal purposes. They decided to treat fixed manufacturing costs as a period cost. Can you rework their income statement for the two years. All other information remains the same as the TechLight Part A case.

Upload the excel spreadsheet with numbers for Scenario 2 and 3.

Scenario 1 Scenario 2 Scenario 3 Absorption Costing Absorption Costing Absorption Costing Variable Costing Year 1 Year 2 Year 1 Year 2 Year 1 Year 2 Year 1 Year 2 Physical Inventory (in units) units units units units units units units units Opening finished goods inventory 5,000 20,000 20,000 5,000 Production 25,000 25,000 40,000 25,000 40,000 25,000 25,000 25,000 Sales 20,000 30,000 20,000 45,000 20,000 30,000 20,000 30,000 Closing finished goods inventory 5,000 20,000 20,000 15,000 5,000 Cost of goods manufactured (in $) (WIP Equation) Total Total Total Total Total Total Total Total S $ $ S $ $ $ $ Opening WIP Add: Manufacturing Costs Variable manufacturing costs 250,000 250,000 400,000 250,000 Fixed manufacturing costs 150,000 150,000 150,000 150,000 Less: Closing WIP Cost of goods manufactured 400,000 400,000 550,000 400,000 Cost of goods sold (in $) (Finished goods Equation) Total Total Total Total Total Total Total Total $ $ S $ S S Opening finished goods inventory 80,000 275,000 Add: Cost of Good manufactured 400,000 400,000 550,000 400,000 - - Less: Closing finished goods inventory 80,000 275,000 - - - Cost of goods solo 320,000 480,000 275,000 675,000 - Traditional Income Statement (in $) Total Total Total Total Total Total Total Total S $ S S Sales 600,000 900,000 600,000 1,350,000 ess: Cost of goods sold 320,000 480,000 275,000 675,000 Gross Margin 280,000 420,000 325,000 675,000 ess: Selling , general and adminsitrative (SG&A) expenses Variable 60,000 90,000 60,000 135,000 Fixed 100,000 100,000 100,000 100,000 Total SG&A 160,000 190,000 160,000 235,000 Operating Income 120,000 230,000 165,000 440,000 Production is increasing. Fixed costs are spread Only variable over more units. Sales manufacturing costs are increasing. Profits are can be part of increasing. inventory