Problem - Absorption and Variable Costing (15 Marks) Bruster Company sells its products for $66 each. The current production level is 25,000 units, although only 20,000 units are anticipated to be sold. Unit manufacturing costs are: Direct materials Direct manufacturing labour Variable manufacturing costs Total fixed manufacturing costs $180,000 Marketing expenses $6.00 per unit, plus $60,000 per year $12.00 $18.00 $9.00 Required: a. Prepare an income statement using absorption costing in the gross margin format. b. Prepare an income statement using variable costing in the contribution margin format.

Problem - Absorption and Variable Costing (15 Marks) Bruster Company sells its products for $66 each. The current production level is 25,000 units, although only 20,000 units are anticipated to be sold. Unit manufacturing costs are: Direct materials $12.00 Direct manufacturing labour $18.00 Variable manufacturing costs $9.00 Total fixed manufacturing costs $180,000 Marketing expenses $6.00 per unit, plus $60,000 per year Required: a. Prepare an income statement using absorption costing in the gross margin format. b. Prepare an income statement using variable costing in the contribution margin format