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The accounting team at Nash is considering its options for reporting performance at the end of this year. Nash specializes in mylar balloons, which it
The accounting team at Nash is considering its options for reporting performance at the end of this year. Nash specializes in mylar balloons, which it sells for $0.73 each. Nash has used only absorption costing within its standard costing system, but management team members feel uneasy about Nash's most recent year's modest income (despite higher-volume sales than the previous year). They wonder if there is a different way to put the financial statements together that would provide a more consistent-and perhaps conservative-presentation of performance. Some people on the accounting team have experience with variable costing, so they suggest putting together a side-by-side comparison of both costing systems for the past two years in order to compare the results. Following are the budgeted costs and budgeted production that were in place for both years, along with actual volume information for each year. Present Nash's income statement for both years under absorption costing
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