Santana Rey expects sales of Business Solutions's line of computer workstation furniture to equal 300 workstations (at a sales price of $3,300 each) for 2018. The workstations' manufacturing costs include the following. Direct materials Direct labor 700 per unit 310 per unit 50 per unit $14,400 per year S Variable overhead Fixed overhead The selling expenses related to these workstations follow. Variable selling expenses Fixed selling expenses $ 45 per unit $3,400 per year Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. 1. Complete the following income statements using absorption costing. Production volume 300 workstations 320 workstations Cost of goods sold: Direct materials per unit $ 700 700 Direct labor per unit 310 310 Variable overhead per unit 50 50 Fixed overhead per unit 48 45 $ 1,108 $ 1,105 Cost of goods sold per unit Number of workstations sold 300 300 $ $ 331,500 332,400 Total cost of goods sold BUSINESS SOLUTIONS Absorption Costing Income Statements Production volume 300 320 Sales volume - 300 Workstations workstations workstations 990,000 $ Sales $ 990,000 Cost of goods sold (332,400) (331,500) Gross margin 658,500 657,600 Selling general and administrative expenses 16,900 16,900 Net income (loss) $ $ 640,700 641,600 Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)? Yes 2. Complete the following income statements using variable costing. BUSINESS SOLUTIONS Variable Costing Income Statements 300 320 Production volume (units) workstations workstations 300 300 Sales volume (units) workstations workstations Sales $ 332,400 $ 331,500 Less: Variable costs Variable overhead Variable selling expenses Direct materials Contribution margin 332,400 331,500 Less: Fixed expenses Fixed overhead costs Fixed selling expenses Direct labor Net income (loss) $ $ 331,500 332,400 Under variable costing, can a company increase No its net income by increasing production