Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. $ AA 40 per unit 60 per unit $ 30 per unit $7,000,000 (per year) Manufacturing costs Direct materials Direct labor Overhead costs Variable Fixed Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit $ 725,000 $5,000,000 100,000 units 70,000 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. Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement Sales $ 24,500,000 Less: Variable costs Direct materials Direct labor $ 2,800,000 4,200,000 2,100,000 700,000 X Variable overhead costs Variable selling and administrative expenses Total variable costs 9,800,000 14,700,000 Contribution margin Less: Fixed expenses Fixed overhead costs 7,000,000 5,000,000 Fixed selling and administrative costs Total fixed expenses 12,000,000 $ 2,700,000 Net income (loss) Prepare an income statement for the year using absorption costing. SIMS COMPANY Absorption Costing Income Statement Sales $ 24,500,000 Less: Cost of goods sold Direct materials Direct labor $ 2,800,000 4,200,000 2,100,000 4,900,000 Variable overhead costs Fixed overhead costs Cost of goods sold Gross margin 14,000,000 10,500,000 Variable selling and administrative expenses Fixed selling and administrative costs 700,000 5,000,000 Total selling, general and administrative expenses Net income (loss) 5,700,000 $ 4,800,000 X