Pharoah Motors is a division of Pharoah Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 190,000 units for $7.00 per unit. Sharon Lee is the division manager. She is considering producing either 190,000 or 240,000 units during the period. Other information is as follows:

Division Information for 2022
Beginning inventory		0
Expected sales in units		190,000
Selling price per unit		$7.00
Variable manufacturing cost per unit		$2.00
Fixed manufacturing cost (total)		$456,000
Fixed manufacturing overhead costs per unit
Based on 190,000 units		$2.40	per unit ($456,000 190,000)
Based on 240,000 units		$1.90	per unit ($456,000 240,000)
Manufacturing cost per unit
Based on 190,000 units		$4.40	per unit ($2.00 variable + $2.40 fixed)
Based on 240,000 units		$3.90	per unit ($2.00 variable + $1.90 fixed)
Variable selling and administrative expenses		$0.35	per unit
Fixed selling and administrative expenses (total)		$11,600

(a)

Prepare an absorption-costing income statement, with one column showing the results if 190,000 units are produced and one column showing the results if 240,000 units are produced.

PHAROAHMOTORS DIVISION Income Statement For the Year Ended 2022 Absorption Costing
Units produced		240,000		190,000
Units sold		enter a number of units		enter a number of units
select an income statement item Cost of goods soldFixed costsVariable costsSalesSelling and administrative expensesGross profitContribution marginNet income		$enter a dollar amount		$enter a dollar amount
select between addition and deduction AddLess: select an income statement item Variable costsSelling and administrative expensesFixed costsSalesContribution marginCost of goods soldNet incomeGross profit		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Variable costsCost of goods soldGross profitContribution marginNet incomeSalesFixed costsSelling and administrative expenses		enter a total amount for the first part		enter a total amount for the first part
select between addition and deduction AddLess: select an income statement item Selling and administrative expensesCost of goods soldSalesGross profitContribution marginFixed costsVariable costsNet income		enter a dollar amount		enter a dollar amount
select a closing name for this statement Gross profitContribution marginNet incomeSelling and administrative expensesVariable costsFixed costsCost of goods soldSales		$enter a total amount for this statement		$enter a total amount for this statement