Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. Sales price per unit Units produced this year Units sold this year $ 300 per unit 115,000 units 118,500 units Units in beginning-year inventory Beginning inventory costs Variable (3,500 units $135) Fixed (3,500 units $70) Total Manufacturing costs this year Direct materials Direct labor 3,500 units $ 472,500 245,000 $ 717,500 A A 46 per unit $ 66 per unit Overhead costs this year Variable overhead $3,400,000 Fixed overhead $7,400,000 Selling and adminstrative costs this year Variable $1,400,000 Fixed 4,000,000 1. Prepare the current year income statement for the company using variable costing. OAK MART COMPANY Variable Costing Income Statement Sales Less: Variable costs Beginning inventory: Variable costs Manufacturing costs this year Direct materials $ 472,500 5,290,000 Direct labor 7,590,000 Variable overhead costs 3,400,000 Total variable costs available 16,752,500 Contribution margin Less: Fixed expenses $ 35,550,000 0 17,870,000 $ Fixed overhead costs 7,400,000 Fixed selling and administrative costs 4,000,000 Variable selling and administrative expenses 1,400,000 Total fixed expenses 12,800,000 Net income (loss) $ 69 Sales Less: Cost of goods sold Beginning inventory Manufacturing costs this year Direct materials Direct labor Variable overhead costs Fixed overhead costs Less: Ending inventory Cost of goods sold Gross margin OAK MART COMPANY Absorption Costing Income Statement 717,500 5,290,000 7,590,000 3,400,000 7,400,000 0 $ 35,550,000 Selling general and administrative expenses Fixed selling and administrative costs $ 4,000,000 Variable selling and administrative expenses 1,400,000 Total fixed expenses Net income (loss) Number of units added to(subtracted from) inventory Fixed costs added to(subtracted from) inventory 24,397,500 11,870,000 5,400,000 $ 6,470,000