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Question 4 AFN Company produces plastic that is used for injection-moulding applications such as gears for small motors. In 2020, the first year of operations,
Question 4 AFN Company produces plastic that is used for injection-moulding applications such as gears for small motors. In 2020, the first year of operations, AFN Company produced 4,400 tonnes of plastic and sold 2,860 tonnes. In 2021, the production and sales results were exactly reversed. In each year, the selling price per tonne was $2,100; variable manufacturing costs were 14% of the sales price for the units produced; variable selling expenses were 8% of the selling price of the units sold; fixed manufacturing costs were $2,860,000; and fixed administrative expenses were $567,600. Prepare comparative income statements for each year using absorption costing. (Use the format from Illustration 8.4.) AFN COMPANY Income Statement-Absorption Costing For the Years Ended December 31 2020 2021 Number of units produced 4,400 2,860 Number of units sold 2,860 4,400 Sales 6,006,000 1 9,240,000
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