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Question 5: Jimbob Co. is a manufacturing company with the following results for a three-year period: Beginning inventory, finished goods (units) Production in units Ending
Question 5: Jimbob Co. is a manufacturing company with the following results for a three-year period: Beginning inventory, finished goods (units) Production in units Ending inventory, finished goods (units) Sales in units ($50 per unit selling price) Variable productions costs per unit Fixed production costs Variable selling and admin costs Fixed selling and admin costs 2018 0 1,000 100 900 $40 $5,000 $2,000 $1,000 2019 100 1,000 0 1,100 $40 $5,000 $2,000 $1,000 2020 0 1,000 0 1,000 $40 $5,000 $2,000 $1,000 There are no inventories at year end other than finished goods. Assume a nil income tax rate. Required: (9 points) a. Prepare an absorption costing income statement for 2018. (4 points) b. Prepare a variable costing (contribution margin) income statement 2018. (4 points) c. What is the differences in net income resulting from the two alternative income statement approaches? (1 point)
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