Homework $7$

b$.$ Prepare an income statement based on variable costing.

c$.$ Assume that you must decide quickly whether to accept a special one$-$time order for $1,000$ units for $$75$ per unit.

Which income statement presents the most relevant data? variable costing

Determine the apparent profit or loss on the special order based solely on these data.

Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number.

$$0$

d$.$ If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why?

Select the most appropriate statement.

OAbsorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs.

Ovariable costing approach because the cost should include a reasonable portion of fixed manufacturing costs.