The 2014 data that follow pertain to Toms Terrific Eyewear, a manufacturer of swimming goggles. (Toms Terrific Eyewear had no beginning Finished Goods Inventory in January 2014)

Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Tom's Terrific Eyewear for the year ended December 31, 2014.

The _____ income statement shows the higher operating income. The operating income under ____ costing is higher because the units sold _________. The difference in operating income between the two income statements is attributable to the _________ attached to the units____________. Toms terrific eyewear marketing vice president believes a new sales promotion that costs $225000 would increase sales to 235000 goggles. Should the company go ahead with the promotion? The company _________ go ahed with the promotion because the additional _________________ the additional cost of the promotion.

Number of goggles produced: 250000

Number of goggles sold: 210000

Sales price per unit: $26

Variable manufacturing cost per unit: $10

Sales commission expense per unit: $5

Fixed manufacturing overhead: $1,750,000

Fixed selling administrative costs: $130,000