Rey Companys single product sells at a price of $221 per unit. Data for its single product for its first year of operations follow.

Direct materials

$

25

per unit

Direct labor

$

33

per unit

Overhead costs

Variable overhead

$

11

per unit

Fixed overhead per year

$

325,000

per year

Selling and administrative expenses

Variable

$

23

per unit

Fixed

$

210,000

per year

Units produced and sold

25,000

units

1.

Prepare an income statement for the year using absorption costing

REY COMPANY
Absorption Costing Income Statement
Net income (loss)

2.

Prepare an income statement for the year using variable costing.

REY COMPANY
Variable Costing Income Statement
Net income (loss)