P20-8B Electricoil is a division of Meier Products Corporation. The division manufactures and sells an electric coil used in a wide variety of applications. During the coming year, it expects to sell 200,000 units for $9 per unit Mark Barnes is the division manager. He is considering producing either 200,000 or 250,000 units during the period. Other information is presented in the schedule. Division Information for 2017 Beginning inventory Expected sales in units Selling price per unit Variable manufacturing costs per unit Fixed manufacturing overhead costs (total) Fixed manufacturing overhead costs per unit Based on 200, units Based on 250, units Manufacturing costs per unit Based on 200, units Based on 250, units Variable selling and administrative expense Fixed selling and administrative expense (total) 0 200,000 $9 $3 $500,000 $2.50 per unit ($50,000 $2.00 per unit ($500, 000 200,000) 250,000) $5.50 per unit ($3 variable $2.50 fixed) $5.00 per unit ($3 variable $2.00 fixed) $0.40 $15,000 Instructions (a) Prepare an absorption costing income statement, with one column showing the results if 200 units are produced and one column showing the results if 250,000 units are produced (b) Prepare a variable costing income statement, with one column showing the results if 200,000 units are produced and one column showing the results if 250,000 units produced. (c) Reconcile the differences in net incomes under the two approaches and explain what accounts for this difference. (d Discuss the-relative usefulness-efthe variable sesting incemestatements versusthe abserptioA-GOsting inceme statementsfordeeisienmaking and forevaluating-the managers-perfermance ELECTRICOIL DIVISION Income Statement For the Year Ended December 31, 2017 Absorption Costing 200,000 Produced (a) 250,000 Produced 1,800,000 Note that "SALES" remain the same Sales #units x $9) 1,800,000 Cost of goods sold in BOTH columns. Gross profit Var selling & Admin The problem is trying to show the difference "Ending Inventory" makes between costing expenses Fxd selling& Admin expenses Net Income methods. ELECTRICOIL DIVISION Income Statement For the Year Ended December 31, 2017 Variable Costing 250,000 Produced (b) 200,000 Produ ced 1,800,000 Sales 1,800,000 # units x $9) Contribution margin Net Income Don't forget this: (c)