Question 3 of 3 0.48/1 View Policies Show Attempt History Current Attempt in Progress Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 6,000 tons of plastic and sold 4,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2.000, variable manufacturing costs were 19% of the sales price of units produced, variable selling expenses were 8% of the selling price of units sold, fixed manufacturing costs were $4,380,000, and fixed administrative expenses were $540,000. Your answer is partially correct. Prepare income statements for each year using variable costing JACKSON COMPANY Income Statement For the Year Ended December 31, 2016 Variable Costing Sales 9000000 Variable Cost of Goods Sold Inventory, January 1 Variable Costs of Goods Manufactured 2280000 i Variable costs of Goods Available for Sale 2280000 i Inventory, December 31 570000 Variable Cost of Goods Sold 1710000 i Variable Selling Expenses Contribution Margin Fixed Manufacturing Overhead Fixed Administrative Expenses $ Net Income/tLoss) JACKSON COMPANY Income Statement For the Year Ended December 31, 2017 Variable Costing Sales $ 12000000 Variable Cost of Goods Sold Inventory, January 1 570000 i Variable Costs of Goods Manufactured Variable Costs of Goods Available for Sale Inventory, December 31 Variable Cost of Goods Sold Variable Selling Expenses Contribution Margin 11 Fixed Manufacturing Overhead 4380000 Fixed Administrative Expenses Net Income/(Loss) e Textbook and Media Prepare income statements for each year using absorption costing. JACKSON COMPANY Income Statement For the Year Ended December 31, 2016 Absorption Costing Sales 9000000 Cost of Goods Sold Inventory, January 1 Costs of Goods Manufactured 6660000 Costs of Goods Available for Sale 6660000 Inventory, December 31 1665000 1 Cost of Goods Sold 4995000 Gross Profit 4005000 Variable Selling Expenses Fixed Administrative Expenses Net Income (Loss) JACKSON COMPANY Income Statement For the Year Ended December 31, 2017 Absorption Costing Sales 12000000 Cost of Goods Sold Inventory, January 1 1665000 i Costs of Goods Manufactured Costs of Goods Available for Sale Inventory, December 31 Cost of Goods Sold Gross Profit Variable Selling Expenses Fixed Administrative Expenses Net Income/(Loss) $ e Textbook and Media Reconcile the differences each year in net income under the two costing approaches. 2016 2017 $ Variable costing net income Fixed manufacturing overhead expensed with variable costing Less: Fixed manufacturing overhead expensed with absorption costing $ $ Difference Absorption costing net income $ $ e Textbook and Media
