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Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (57,200 units) during the first month, creating an ending inventory of 5,200 units. During February, the company produced 52,000 units during the month but sold 57,200 units at $90 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost Manufacturing costs in February 1 beginning inventory: Variable 5,200 $36.00 $187,200 Fixed 5,200 14.00 72,800 Total $50.00 $260,000 Manufacturing costs in February: Variable 52,000 $36.00 $1,872,000
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