Income Statements, Variable and Absorption Costing

The following information pertains to Vladamir, Inc., for last year:

Beginning inventory, units1,500

Units produced100,000

Units sold101,000

Variable costs per unit:

Direct materials$8.00

Direct labor$10.00

Variable overhead$2.00

Variable selling expenses$2.00

Fixed costs per year:

Fixed overhead$200,000

Fixed selling and administrative expenses$230,000

There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next.

3.Assume the selling price per unit is $30. Prepare an income statement using variable costing.

4.Assume the selling price per unit is $30. Prepare an income statement using absorption costing.