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The annual data that follows pertain to Goggles 4 U, a manufacturer of swimming goggles (the company had no beginning inventory): (Click the icon to
The annual data that follows pertain to Goggles 4 U, a manufacturer of swimming goggles (the company had no beginning inventory): (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 Goggles 4 U for the year. Begin with the conventional (absorption costing) income statement. Goggles 4 U - X Income Statement (Absorption Costing) Data table For the Year Ended December 31 Less Less: Operating expenses Sales price S 49 Variable manufacturing expense per unit S 23 Sales commission expense per unit .......S 6 Fixed manufacturing overhead... S 1,980,000 Fixed operating expenses S 240,000 Number of goggles produced... 220,000 Number of goggles sold 200,000 Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Goggles 4 U for the year. 2. Which statement shows the higher operating income? Why? 3. The company marketing vice president believes a new sales promotion that costs $160,000 would increase sales to 220,000 goggles. Should the company go ahead with the promotion? Give your reason
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