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The 2018 data that follow pertain to Ed's Easy Eyewear, a manufacturer of swimming goggles. (Ed's Easy Eyewear had no beginning Finished Goods Inventory in
The 2018 data that follow pertain to Ed's Easy Eyewear, a manufacturer of swimming goggles. (Ed's Easy Eyewear had no beginning Finished Goods Inventory in January 2018.) (Click the icon to view the data.) Read the requirements Requirement 1. Prepare both conventional absorption costing) and contribution margin (variable costing) income statements for Ed's Easy Eyewear for the year ended December 31, 2018. (Round intermediary calculations to the nearest cent.) Begin by preparing Ed's Easy Eyewear's conventional (absorption costing) income statement for the year ended December 31, 2018. Data Table Requirements Ed's Easy Eyewear Income Statement (Absorption Costing) Year Ended December 31, 2018 Net Sales Revenue 5460000 Cost of Goods Sold Gross Profit Selling and Administrative Costs 170,000 140,000 $ 39 Number of goggles produced Number of goggles sold Sales price per unit Variable manufacturing cost per unit Sales commission cost per unit Fixed manufacturing overhead Fixed selling and administrative costs 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Ed's Easy Eyewear for the year ended December 31, 2018. 2. Which statement shows the higher operating income? Why? 3. Ed's Easy Eyewear's marketing vice president believes a new sales promotion that costs $90,000 would increase sales to 155,000 goggles. Should the company go ahead with the promotion? Give your reasoning. 12 6. Operating Income 1,020,000 190,000 Print Done Print Done
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