OxiClear manufactures a tile and grout cleaner.The company was formed during the current year.As a result, there was no beginning inventory.Management is evaluating performance and inventory management issues, and desires to know both net income and ending inventory under generally accepted accounting principles (absorption costing) as well as variable costing methods.Relevant facts are as follows:

• Selling price per gallon $4.40
• Variable manufacturing cost per gallon 0.80
• Variable SG&A costs per gallon 0.90
• Fixed manufacturing costs $1,450,000
• Fixed SG&A 235,000
• Total gallons produced 650,000
• Total gallons sold 620,000

Calculate the contribution margin per unit usingabsorption costing:

Hint: Assume that they only purchased and sold 620,000 gallons

Calculate the contribution margin per unit usingvariable costing:

Hint: Assume that they only purchased and sold 620,000 gallons

Calculate total profit or loss usingabsorption costing:

Hint:Again assume that they only produced and sold 620,000 gallons:

Calculate total profit or loss usingvariable costing:

Hint:Again assume that they only produced and sold 620,000 gallons: