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Problem 2. Answer all parts and provide supporting calculations that are clearly labeled Sally's Ski Boot Inc. manufactures ski boots. The following information is from
Problem 2. Answer all parts and provide supporting calculations that are clearly labeled Sally's Ski Boot Inc. manufactures ski boots. The following information is from the first year of operations: Sales Price Number manufactured Number sold $490 per pair 22,000 pairs 18,000 pairs Total fixed manufacturing OH costs Total fixed Selling and Admin Costs $1,219,900 $ 800,000 Direct materials Direct Labor Variable manufacturing OH cost Variable Selling and Admin cost $125.00 per pair $85.00 per pair $ 27.00 per pair $ 42.00 per pair Required: 1. Prepare an income statement under absorption costing for the first year. 2. Prepare an income statement under variable costing for the first year. 3. Explain why your answer in part 1 is different from your answer in part 2. Be specific and provide supporting calculations that are labeled. Be sure to incorporate the impact to the balance account as well as income statement account (finished foods inventory and COGS). 4. Which method, absorption or variable costing, is more informative to management in the short-term and why
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