hello, please help me i these.

MINICASE 3

Paisley Paddler Mfg. has just finished its first year of operations producing two types of sun visors specially designed for kayakers and canoeists. Both types of visors are shaped for maximum sun block, use special colours, and are designed to prevent the attraction of bugs under the visor, a problem often experienced by small boat operators. The Shade Curve visor has a selling price of $4.20. The Float Curve visor is more expensive ($6.40) because it is produced with more costly material that prevents it from sinking under any circumstances. The Float Curve also requires more time and labour to produce. While the product is produced in the small town of Paisley, Ontario, the Internet is used for order placement and fulfilment. After a successful first year, the company owner is investigating the possibility of sourcing expansion capital through crowdfunding. In preparation for this, the accounting staff is compiling data and preparing financial information for presentation to potential investors.

The sales for the Shade Curve totalled 250,000 units during the first year, and sales of the Float Curve were 75,000 units. Given it was the first year of operations, there was no beginning finished goods inventory; however, ending inventory for the Float Curve was 35,000 units. Sales of the Shade Curve were greater than anticipated, making it difficult to keep up with demand and, as a result, there was no ending finished goods inventory.

Paisley Paddler allocates fixed overhead on the basis of direct labour hours. Budgeted fixed overhead at the beginning of the year was $140,000 and expected direct labour hours were 140,000. The following is detailed manufacturing cost information:

Manufacturing costs:

Shade Curve

Float Curve

Direct materials

$150,000

$74,800

Direct labour

412,500

247,500

Variable overhead

12,500

17,600

Fixed overhead:

Direct

45,000

55,000

Common

20,000

20,000

Actual direct labour hours were 85,000 for the Shade Curve and 55,000 for the Float Curve.

While the Internet is used extensively for order placement and for some promotion, Paisley Paddler also has a part-time sales force that attends promotional events at venues such as the semi-annual Toronto Cottage Life Show and the annual Sportsman Show. Selling and other nonmanufacturing costs are provided below:

Nonmanufacturing costs:

Shade Curve

Float Curve

Variable selling

$50,000

$20,000

Direct fixed selling

42,000

38,000

Common fixed administrative

22,000

22,000

The raw materials for the visors are purchased from a supplier in Toronto. The costs to place an order for the raw materials for the Shade Curve and the Float Curve are $35 and $110, respectively. Production of one Shade Curve requires 1.5 units of raw material, while production of one Float Curve requires 2 units of raw material (the cost of waste in the production process cannot be recovered). The carrying costs regarding the Shade Curve and the Float Curve raw materials are $0.109 and $0.229, respectively. The beginning and ending balances of the raw materials accounts were as follows (note that the company was incorporated a year earlier and had purchased raw materials beginning inventory in advance):

Shade CurveFloat Curve

Raw materials beginning inventory in units

18,500

12,000

Raw materials ending inventory in units

26,500

2,000

Required:

1.Calculate the EOQ for each of the raw materials using the first year's purchased quantity as the annual demand for each.

2.Prepare income statements for each product using absorption costing and variable costing.

3.Which income statement would management be more tempted to present to potential investors? Why is the operating income different for the Float Curve under the two costing methods? Which costing method is traditionally used for GAAP?