Question
Hydro-Go makes insulated plastic bottles for bikes that the company sells for $4.00 each. The following chart indicates production and sales [in units] for the
Hydro-Go makes insulated plastic bottles for bikes that the company sells for $4.00 each.
The following chart indicates production and sales [in units] for the prior two years:
Production Sales
2021 250,000 200,000
2022 200,000 250,000
Both years had the same costs: fixed manufacturing: $500,000 in total
variable manufacturing: $1 per bottle
The company president [not an MBA grad from Ottawa] is confused by the income statements for the two years the costs were the same each year and the product sold for the same price, sales increased in 2022, but income was lower.
How will you explain this to the president?
Required prepare income statements for each year to support your explanation.
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