Hammock Manufacturing manufactures a single product that it will sell for $$89$ per unit. The company is looking to project its operating

income for its first two years of operations. Cost information for the single unit of its product is as follows:

$($Click the icon to view the data.$)$

During its first year of operations, the company plans to manufacture $26,000$ units and anticipates selling $21,000$ of those units.

During the second year of its operations, the company plans to manufacture $26,000$ units and anticipates selling $30,000$ units $($it

has units in beginning inventory for the second year from its first year of operations$).$

Read the requirements.

Requirement $1.$ Prepare an absorption costing income statement for $($a$)$ the first year of operations and $($b$)$ the second year of operations.

Hammock Manufacturing

Income Statement $($Absorption Costing$)$

Requirement $2.$ Before you prepare the variable costing income statements for Hammock, predict the company's operating income using variable costing for both its first year and

variable costing operating income for a given year by taking that year's absorption costing operating income and adding or subtracting the difference in operating income as calcula

$x$ Fixed MOH per unit$).$

Begin by calculating the difference in income each year using the formula provided.

Requirements

Prepare an absorption costing income statement for the following:

a$.$ The first year of operations

b$.$ The second year of operations

Before you prepare the variable costing income statements for Hammock,

predict the company's operating income using variable costing for both its first

year and its second year without preparing the variable costing income

statements. Hint: Calculate the variable costing operating income for a given

year by taking that year's absorption costing operating income and adding or

subtracting the difference in operating income as calculated using the

following formula:

Difference in operating income $=($Change in inventory level in units $x$ Fixed

MOH per unit$)$

Prepare a variable costing income statement for each of the following years:

a$.$ The first year of operations

b$.$ The second year of operations

Direct material per unit produced $$29$

Direct labor cost per unit produced $$17$

Variable manufacturing overhead $($MOH$)$ per unit produced $$10$

Variable operating expenses per unit sold $$4$

Fixed manufacturing overhead $($MOH$)$ for each year is $$364,000,$

while fixed operating expenses for each year will be $$90,000.$Question content area top left

Part $1$

Hammock Manufacturing manufactures a single product that it will sell for $ $89$ per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of its product is as$$ follows:

LOADING...$($Click the icon to view the$$ data.$)$

$.$

$.$

$.$

Question content area top right

Part $1$

During its first year of$$ operations, the company plans to manufacture $26$ comma $000$ units and anticipates selling $21$ comma $000$ of those units. During the second year of its$$ operations, the company plans to manufacture $26$ comma $000$ units and anticipates selling $30$ comma $000$ units$($it has units in beginning inventory for the second year from its first year of$$ operations$).$

Read the requirementsLOADING....

Question content area bottom

Part $1$

Requirement $1.$ Prepare an absorption costing income statement for $($a$)$ the first year of operations and $($b$)$ the second year of operations.

Hammock Manufacturing

Income Statement $($Absorption Costing$)$

$($a$)$ Year $1$

Less:

Less: