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	$	35	per unit
Direct labor	$	55	per unit
Overhead costs
Variable	$	40	per unit
Fixed	$	6,300,000	(per year)
Selling and administrative costs for the year
Variable	$	700,000
Fixed	$	5,000,000
Production and sales for the year
Units produced		105,000	units
Units sold		75,000	units
Sales price per unit	$	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
Salesselected answer correct		$26,250,000selected answer correct
Less: Variable costsselected answer correct
Direct materialsselected answer correct	$2,625,000selected answer correct
Direct laborselected answer correct	4,125,000selected answer correct
Variable overhead costsselected answer correct	175,000,000selected answer incorrect
Variable selling and administrative expensesselected answer correct	not attempted
not attempted	not attempted
Total variable costsselected answer correct		181,750,000
Contribution marginselected answer correct		not attempted
Less: Fixed expensesselected answer correct
Fixed selling and administrative costsselected answer correct	not attempted
Fixed overhead costsselected answer correct	not attempted
not attempted	not attempted
Net income (loss)