PepsiCo, Inc. provides the following information for its production of 50,000 units:
•Direct materials: $200,000
•Direct labor: $150,000
•Variable manufacturing overhead: $100,000
•Fixed manufacturing overhead: $300,000
•Variable selling and administrative expenses: $75,000
•Fixed selling and administrative expenses: $125,000
Required:
1.Prepare an income statement using absorption costing.
2.Prepare an income statement using variable costing.
3.Reconcile the net incomes obtained under both methods.