Question
P-M:6-35B. Using variable and absorption costing, making decisions (Learning Objectives 1, 2, 3) The annual data that follow pertain to Eli's Electric Eyewear, a
P-M:6-35B. Using variable and absorption costing, making decisions (Learning Objectives 1, 2, 3) The annual data that follow pertain to Eli's Electric Eyewear, a manufacturer of swimming goggles. (Eli's Electric Eyewear had no beginning Finished Goods Inventory in January.) Number of goggles produced 245,000 Number of goggles sold Sales price per unit Variable manufacturing cost per unit 215,000 $ 22 8 Sales commission cost per unit 5 Fixed manufacturing overhead 1,470,000 Fixed selling and administrative costs 250,000 Requirements Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Eli's Electric Eyewear year ended December 31. for the 1. FC variable costing $1,720,000 2. Which statement shows the higher operating income? Why? 3. Eli's Electric Eyewear's marketing vice president believes a new sales promotion that costs $60,000 would increase sales to 220,000 goggles. Should the company go ahead with the promotion? Give your reasoning.
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