HELP NEEDED for PA.17

PA17. LO 6.5 This information was collected for the first year of manufacturing for Appliance Apps: Direct materials per unit $ 2.50 Direct labor per unit $ 1.50 Variable manufacturing overhead per unit $ 0.25 Variable selling and administration expenses $ 1.75 Units produced 40,000 Units sold 35,000 Sales price $ 12 Fixed manufacturing expenses $140,000 Fixed selling and administration expenses $ 20,000 Prepare an income statement under variable costing, and prepare a reconciliation to the income under the absorption method. Solution Sales 35,000 Variable Cost of Goods Sold I Gross Contribution Margin Variable Selling and Administrative Expenses Contribution Margin 210,000 Fixed Manufacturing Expenses Fixed Selling and Administrative Expenses Net Income Reconciliation Net Income under Variable Page 15 of 16 OpenStax Principles of Accounting, Volume 2: Managerial Accounting Chapter 6: Activity-Based, Variable, and Absorption Costing Fixed Manufacturing Overhead Deferred Net Income under Absorption $67,500