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Santana Rey expects sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,700) for 2014. The
Santana Rey expects sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,700) for 2014. The workstations' manufacturing costs include the following. Direct materials Direct labor $ Variable overhead Fixed overhead SSSSA 760 per unit $ 370 per unit $ 80 per unit $19,200 per year The selling expenses related to these workstations follow. Variable selling expenses Fixed selling expenses $ 50 per unit $ 3,600 per year Santana is considering how many workstations to produce in 2016. She is confident that she will be able to sell any workstations in her 2016 ending inventory during 2017. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. Required: 1. Complete the following income statements using absorption costing. Cost of goods sold: Cost of goods sold per unit Number of workstations sold Total cost of goods sold Production volume 300 workstations 320 workstations BUSINESS SOLUTIONS Absorption Costing Income Statements Sales volume - 300 Workstations Production volume 300 workstations 320 workstations Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)? 2. Complete the following income statements using variable costing. BUSINESS SOLUTIONS Variable Costing Income Statements Production volume (units) Sales volume (units) Net income (loss) Under variable costing, can a company increase its net income by increasing production? 300 workstations 320 workstations 300 300 workstations workstations
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