Problem 9.

On January 1 of the current year, C. F. Hartley Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

Units

Production

Sales ($18 per unit)50,000

Inventory, January 3142,000

8,000

Total Cost or Expense

Manufacturing costs:

Variable$575,000

Fixed75,000

Total$ 650,000

Selling and administrative expenses:

Variable$ 33,600

Fixed10,500

Total$ 44,100

(a) Prepare an income statement in accordance with absorption costing.

(b) Prepare an income statement in accordance with variable costing.