Required information Exercise 19.7 Income reporting under absorption costing and variable costing LO P2 [The following information applies to the questions displayed below.] Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 330 per unit 115,000 units 118,750 units 3,750 units $ 525,000 262,500 $ 787,500 Sales price per unit Units produced this year Units sold this year Units in beginning-year Inventory Beginning inventory costs Variable (3,750 units x $140) Fixed (3,750 units x 570) Total Manufacturing costs this year Direct materials Direct labor Overhead costs this year Variable overhead Fixed overhead Selling and administrative costs this year Variable Fixed 4e per unit 68 per unit $3,600,000 $7,600,000 $1,350,000 4,400,000 Exercise 19-7 Part 1 1. Prepare the current year income statement for the company using variable costing. Exercise 19-7 Part 1 1. Prepare the current-year income statement for the company using variable costing. 39,187,500 OAK MART COMPANY Variable Costing Income Statement Sales E AS Less: Variable costs Beginning inventory Variable costs $ 525.000|| TUNNIN BULATEDRA Manufacturing costs this year Direct materials i 4,600,000 Direct laborNN I NG 7.820,000 Variable overhead costs | 3,600,000 Total variable costs available 16,545,000 Less: Ending finished goods inventory 0 Variable cost of goods sold 16,545,000 Variable selling and administrative expenses 1,350,000 17,895,000 21.292,500 Total variable costs Contribution margin Less: Fixed expenses Fixed selling and administrative costs Fixed overhead costs 4,400,000 7,600,000 Total fixed expenses Net income (loss) 12,000,000 9,292,500 s 2. Prepare the current-year income statement for the company using absorption costing. Answer is not complete. OAK MART COMPANY Absorption Costing Income Statement S 39,187,500 Sales Less: Cost of goods sold Beginning inventory Manufacturing costs this year Direct materials Direct labor Variable overhead costs Fixed overhead costs Less: Ending inventory OOOO su 787,500 RA NI 4,600,000 7,820,000 525,000 262,500 $ 0 13,995,000 25,192,500 ! Gross margin Selling general and administrative expenses Fixed selling and administrative costs Variable selling and administrative expenses $ 4,400,000 1,350,000 Total selling general and administrative expenses Net income (loss) 5,750,000 19,442,500 $ Net income under variable costing is higher than net income under absorption costing by Number of units added to(subtracted from) inventory Fixed overhead cost per unit Fixed costs added to(subtracted from) inventory 3,542,500 3.750 70 262,500 $ S