If you could solve this in the same layout that would be great trying to review for test.

Problem 1 (Supplemental Problem #1 Prepare income statements under vanable costing contribution margin format) and absorption cos ting (traditional format) Costner Company uses an absorption costing system in accounting for the single product it manufactures. The follow ing selected data are for the year 2013. Sales (10,000 units) Direct materials used in production (variable cost) Direct labor costs (variable cost) Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses S360,000 $129,600 S 43,200 S 12,960 s 17,280 S 21,600 72,000 The company produced 12,000 units and sold 10,000 units. Direct materials and direct labor are variable costs. One unit of direct material goes into each unit of finished goods. Overhead rates are based on a volume of 12,000 units and are $1.08 and S1.44 per unit for variable and fixed overhead, respectively. The ending inventory is the 2,000 units of finished goods on hand at the end of 2013. There was no inventory at the beginning of 2013. Hint: You must compute the cost of production per unit (12,000 unis were produced) in order to compute the cost of ending inventory (2,000 units remain in ending inventory at the end of the period). Units in Finished Goods Inventory Beginning +Produced Sol Ending Required: Prepare an income statement for 2013 under variable costing. (Template has been provided on the next page). Prepare and income statement for 2013 under absorption costing. (Template has been provided on the next page). Explain the reason for the difference in net income between aand b. (Answer to part C bolded below). a. b. c. **Answer: The net income under absorption costing is $2,880 higher (597,200-$94,320) than under variable costing. Under variable costing, all of the $17,280 of fix absorption costing, since one sixth of the units produced were not sold, one sicxth of the fixed overhead is not expensed, ed overhead is charged to the period as an expense. Under but is included in inventory. One sixth of the fixed overhead is $2,880, calculated as (S17,2806*