Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 3,900 tons of plastic and sold 3,510 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,100, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 11% of the selling price of units sold, fixed manufacturing costs were $2,886,000, and fixed administrative expenses were $520,000. Your answer is correct. Prepare income statements for each year using variable costing. JACKSON COMPANY Income Statement For the Year Ended December 31, 2016 Variable Costing 1 Sales JACKSON COMPANY Income Statement For the Year Ended December 31, 2017 Absorption Costing Sales 8,190,000 Cost of Goods Sold Inventory, January 1 411450 i Costs of Goods Manufactured Costs of Goods Available for Sale Inventory, December 31 Cost of Goods Sold Gross Profit Variable Selling Expenses 900,900 Fixed Administrative Expenses 520,000 i 1420900 Net Income/(Loss) Your answer is partially correct. Reconcile the differences each year in net income under the two costing approaches. 2016 2017 Variable costing net income $ 2048540 2654600 Fixed manufacturing overhead expensed with variable costing 2,886,000 $ 2,886,000 Less: Fixed manufacturing overhead expensed with absorption costing Difference Absorption costing net income 2,337,140 eTextbook and Media