Frepare both conwentional $($absorption costing$)$ and contribution margin $($wariatile costing$)$ income statements for Elis Electric Eyewear for the year ended December $31.$

Which statement shows the higher operating income? why?

Elis Electric Ejewesr's marketing vice president believes a new sales promotion that costs $$60,000$ would increase sales to $220,000$ goggles. Should the company go ahead with the promotion? Give your reasoning.

Solution:

Requirement $1$

ELI'S ELECTRIC EYEYEAR Income Statement

For the Year Ended December $31$

ELIS ELECTAIC EYEVEAR

Contribution Margin Income Statement For the Year Ended December $31$