Problem 2

Harball Company makes skateboards., began operations on January 1, 2019. During the year, the company made 90,000 skateboards and sold 60,000 skateboards at a sales price of $30 per unit. Production and non-production costs for 2019 are shown in the following table:

Production costs
Direct materials	$4.00 per unit
Direct labor	$5.00 per unit
Variable overhead	$3.00 per unit
Fixed overhead	$540,000 total
Non-production costs
Variable selling and administrative	$2 per unit
Fixed selling and administrative	$50,000 total

a. Prepare Peapods December 31, 2019 income statement under absorption costing.

DO NOT LUMP THE VARIOUS COST ONTO 1 LINE. EACH COST SHOULD BE ON A SEPARATE LINE AND SHOW CALCULATIONS FOR EACH LINE

b. Prepare Peapods December 31, 2019 income statement under variable costing.

DO NOT LUMP THE VARIOUS COST ONTO 1 LINE. EACH COST SHOULD BE ON A SEPARATE LINE AND SHOW CALCULATIONS FOR EACH LINE

c. Explain and reconcile the difference between the net incomes