Required information [The following information applies to the questions displayed below.] Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 7,350 rackets and sold 5,580. Each racket was sold at a price of $90. Fixed overhead costs are $95,550 per year, and fixed selling and administrative costs are $68,000 per year. The company also reports the following per unit variable costs for the year. Direct materials Direct labor Variable overhead Variable selling and administrative expenses $ 12 8 Prepare an income statement under variable costing. Sales Less Variable expenses ACES INCORPORATED Income Statement (Variable Costing) Variable cost of goods sold Variable selling and administrative expenses Contribution margin Less Fixed expenses Fixed overhead Fixed selling and administrative expenses Income Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow Income Statements (Absorption Costing) Sales ($62 per unit) 16 points Cost of goods sold ($49 per unit) eBook Print References Gross profit Selling and administrative expenses Income Additional Information 6. Sales and production data for these first two years follow Year 2 $ 4,464,000 Year 1 $ 1,860,000 1,470,000 390,000 3,528,000 936,000 275,000 $115,000 317,000 $619,000 Units Units produced Units sold Year 1 51,000 Year 2 51,000 30,000 72,000 1 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $49 per unit product cost using absorption costing consists of the following Direct materials Direct labor Variable overhead Fixed overhead ($459,000/51,000 units) Total product cost per unit $14 T $49 c. Selling and administrative expenses consist of the following 16 points eBook Print c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total Required: Year 1 $ 30,000 245,000 $275,000 Year 2 $ 72,000 245,000 $317,000 Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.) Sales Less Variable expenses Income (Loss) DOWELL Company Income Statements (Variable Costing) Year 1 Year 2 $ 1.860 000 $ 4.464.000 Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 25,125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 20,100 tons. Based on projected production and sales of 20,100 tons, the company estimates the following income using absorption costing. Sales (20,100 tons at $148 per ton) Cost of goods sold (20,100 tons at $60 per ton) Gross profit Selling and administrative expenses Incone $ 2,974,800 1,206,000 1,768,800 213,400 $ 1,555,400 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment Direct materials Direct labor Variable overhead $13 per ton $ 4 per ton Fixed overhead ($804,000/20, 100 tons) $3 per ton $40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $213,400 per year. The company's president will not earn a bonus unless a positive income is reported The controller mentions that because the company has large storage capacity, it can report a positive income by setting production at the usual 25.125 ton level even though it expects to sell only 20,100 tons. The president is surprised that the company can report income by producing more without increasing sales. Required: 1. Prepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons. Can the company report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production in inventory? 2. By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to only producing 20,100 tons? 2. By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to onl producing 20,100 tons? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons. Can the company report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production in inventory? (Round your answers to the nearest whole dollar.) BLAZER CHEMICAL Income Statement (Absorption Costing) 0 $ 0 Did the company report a positive income? Required 2 > The controller mentions that because the company has large storage capacity, it can report a positive income by setting production at the usual 25,125 ton level even though it expects to sell only 20,100 tons. The president is surprised that the company can report income by producing more without increasing sales. Required: 1. Prepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons, Can the company report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production in inventory? 2. By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to only producing 20,100 tons? Complete this question by entering your answers in the tabs below. Required 11 Required 2 By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to only producing 20,100 tons? Increase in income