1. Summarized data for Walrus Co. for its first year of operations are:

   Sales (90,000 units)	$4,500,000
   Production Costs (108,000 units):
   Direct Material	1,620,000
   Direct Labor	1,350,000
   Manufacturing Overhead:
   Variable	810,000
   Fixed	216,000
   Selling and Administrative Expenses:
   Variable	225,000
   Fixed	396,000

   A. Prepare an income statement under absorption costing.

   Walrus Co.

   Absorption Costing Income Statement

   Sales

   • Cash
   • Miscellaneous Expenses
   • Operating Expenses
   • Sales
   • Service Revenue
   $

   4,500,000

   Cost of Goods Sold:

   Direct Material

   • Direct Material
   • Miscellaneous Expenses
   • Operating Expenses
   • Sales
   • Variable Costs
   $

   1,620,000

   Direct Labor

   • Direct Labor
   • Miscellaneous Expenses
   • Operating Expenses
   • Sales
   • Variable Costs

   1,350,000

   Variable Overhead

   • Direct Expenses
   • Miscellaneous Expenses
   • Operating Expenses
   • Sales
   • Variable Overhead

   810,000

   Fixed Overhead

   • Direct Expenses
   • Fixed Overhead
   • Miscellaneous Expenses
   • Operating Expenses
   • Sales

   216,000

   $

   3,996,000

   Ending Inventory

   • Direct Material
   • Ending Inventory
   • Operating Expenses
   • Sales
   • Variable Costs
   Total Cost of Goods Sold

   • Miscellaneous Expenses
   • Operating Expenses
   • Sales
   • Total Cost of Goods Sold
   • Variable Costs
   Gross Profit

   • Gross Profit
   • Net Income
   • Operating Expenses
   • Sales
   • Variable Costs

   $

   Selling and Administrative Expenses

   • Direct Labor
   • Fixed Overhead
   • Miscellaneous Expenses
   • Operating Expenses
   • Selling and Administrative Expenses
   Net Income

   • Gross Profit
   • Net Income
   • Net Loss
   • Sales
   • Variable Costs

   • B. Prepare an income statement under variable costing.

     Walrus Co.
     Variable Costing Income Statement
     Sales Cash Miscellaneous Expenses Operating Expenses Sales Service Revenue		$ 4,500,000
     Variable Cost of Goods Sold:
     Direct Material Direct Material Miscellaneous Expenses Operating Expenses Sales Variable Costs	$ 1,620,000
     Direct Labor Direct Labor Miscellaneous Expenses Operating Expenses Sales Variable Costs	1,350,000
     Variable Overhead Direct Labor Miscellaneous Expenses Operating Expenses Sales Variable Overhead	810,000
     	$ 3,780,000
     Ending Inventory Direct Material Ending Inventory Operating Expenses Sales Variable Costs
     Total Variable Cost of Goods Sold Miscellaneous Expenses Operating Expenses Rent Expense Sales Total Variable Cost of Goods Sold
     Variable Selling Expenses Miscellaneous Expenses Operating Expenses Rent Expense Sales Variable Selling Expenses
     Contribution Margin Contribution Margin Gross Profit Net Income Sales Variable Costs		$
     Fixed Expenses:
     Fixed Manufacturing Overhead Fixed Manufacturing Overhead Miscellaneous Expenses Operating Expenses Rent Expense Sales	$
     Fixed Administrative Expenses Fixed Administrative Expenses Miscellaneous Expenses Operating Expenses Rent Expense Sales
     Net Income Contribution Margin Gross Profit Net Income Net Loss Variable Costs		$

   $