Joan Keathley has been trying to convince her boss, Jeff Hamilton, to use variable costing for internal reporting purposes. If we could predict demand better, it wouldnt be an issue, argued Joan. Jeff doesnt think it is worth the extra effort or confusion of maintaining two sets of books. As a last resort, Joan has prepared income statements under five different scenarios of production volume. She believes that if this doesnt convince Jeff that their current income statements have been misleading, nothing will. The following table shows the inventory unit data under five scenarios. Each scenario should be considered independently.

		Scenario
		A			B			C			D			E
Beginning inventory		200			200			200			200			200
Production		400			500			600			700			800
Sales		(600)			(600)			(600)			(600)			(600)
Ending inventory		0			100			200			300			400

Joan gathered the following information from the accounting records. Fixed manufacturing costs per unit were determined based on normal production of 600 units per year. The 200 units in beginning inventory are valued at $62.00.

Sales price per unit		$	97.00
Variable manufacturing costs per unit		$	19.00
Fixed manufacturing costs per unit		$	43.00
Total fixed manufacturing costs		$	25,800
Total selling expense (all fixed)		$	20,550

(a) Complete the following table. Scenario A is completed for you as a guide. (Round per unit answers to 2 decimal places, e.g. 15.25 and all other revenues and costs to 0 decimal places, e.g. 5,275.)

Scenario Product cost per unit Variable cost Fixed cost Total unit cost $19.00 64.50 $83.50 $19.00 $19.00 $19.00 $19.00 Income Statement-Absorption Costing Sales Cost of goods sold $58,200s (12,400) (33,400) (45,800) 12,400 (20,550) $(8,150) Units in beginning inventory Units sold from current year production Total cost of goods sold Gross margin Selling expense Operating income