Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials Direct labor Overhead costs Variable 35 per unit 55 per unit 20 per unit Fixed $8,400,000 (per year) $ 725,000 $4,250,000 Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit 105,000 units 75,000 units 350 per unit 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. Required 1 Required 2 Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement 24,500,000 Sales Less: Variable costs Direct materials Direct labor 4 Variable overhead costs Variable selling and administrative expenses 2,625,000 ,125,000 1,500,000 6,000,000 X 14,250,000 14,630,000 Total variable costs Contribution margin Less: Fixed expenses Fixed overhead costs Fixed selling and administrative costs 6,000,000 4,250,000 Total fixed expenses Net income (loss) 10,250,000 $ 3,380,000 Required 1 Required 2 Prepare an income statement for the year using absorption costing. $ 24,500,000 SIMS COMPANY Absorption Costing Income Statement Sales Less: Cost of goods sold Direct materials 2,625,000 Direct labor 4,125,000 Variable overhead costs 1,500,000 Fixed overhead costs 6,000,000 14,250,000 14,630,000 X Cost of goods sold Gross margin Selling general and administrative expenses Variable selling and administrative expenses Fixed selling and administrative costs 725,000 4,250,000 Total selling, general and administrative expenses Net income (loss) 4,975,000 $ 3,380,000