The annual data that follows pertain to Swim Clearly, a manufacturer of swimming google (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 Swim Cloanty for the year. Begin with the conventional (absorption costing) Income statement Swim Clearly Income Statement (Absorption Costing) For the Year Ended December 31 Sales revenue $ 9,798.000 6,177,000 Less: Cost of goods sold Gross profit 3,621,000 2,801,000 Less: Operating expenses 820,000 Operating income Now let's prepare the contribution margin (variabile costing) income statement for Swim Clearly for the year, Swim Clearly Contribution Margin (Variable Coating) Income Statement For the Year Ended December 31 Sales revenue 9.798.000 Loss Variable expenses $ The annual data that follows pertain to Swim Clearly, a manufacturer of swimming goggles (the company had no beginning inventory): Click the icon to view the data.) Read the requirements Now let's prepare the contribution margin (variable costing) Income statement for Swim Clearly for the year, Swim Clearly Contribution Margin (Variable Costing) Income Statement For the Year Ended December 31 Sales revenue 5 9,798,000 Less: Variable expenses Variable cost of goods sold $ 3,621,000 Variable operating expenses 2,556,000 Contribution margin 3,621,000 Les Fixed expenses Fixed operating expenses 245,000 2.820,000 Fixed manufacturing overhead 556,000 Operating Income Requirement 2. Which statement shows the higher operating income? Why? Absorption costing operating income is higher than variable costing operating income. This is because absorption costing defors 5 264,000 of fixed manufacturing overhead is an asset in ending inventory. In contrast, variable costing expenses The annual data that follows pertain to Swim Clearly, a manufacturer of swimming goggles (the company had no beginning inventory): Click the icon to view the data.) Read the requirements. Fixed operating expenses 245,000 Fixed manufacturing overhead 2,820,000 $ 556,000 Operating income Requirement 2. Which statement shows the higher operating income? Why? Absorption costing operating income is higher than variable costing operating Income. This is because absorption costing defors $ 264,000 of fixed manufacturing overhead as an asset in ending inventory. In contrast, variable costing expenses all of the fixed manufacturing overhead during the year. Variable costing expenses 5 264,000 more costs during the year, so variable costing operating income is $ 264,000 than absorption costing income the year. Requirement 3. The company marketing vice president believes a new sales promotion that costs $135,000 would increase sales to 235,000 goggles. Should the company go ahead with the promotion? Give your reason Use the contribution margin income statement format to evaluate the sales promotion Increase in contribution margin Increase in fixed expenses less Increase in operating income The annual data that follows pertain to Swim Clearly, a manufacturer of swimming goggles (the company had no beginning inventory (Click the icon to view the data.) 2 Read the requirements - Fixed operating expenses Food manufacturing overhead Data Table 99 Operating income 15 46 Requirement 2 Which statement shows a 12 sorption costing Absorption costing operating income is defers 264,000 of faced manufacture all of the foxed manufacturing overhe Sales price $ Variable manufacturing expense per unit.. 17 Sales commission expense per unit $ Foted manufacturing overhead $ 2.820.000 Fixed operating expenses S 245,000 Number of goggles produced 235,000 Number of goggles sold 213,000 me is $ 264,000 sales to 235,000 goggles. Should the Variable costing expenses $ less than absorpbon costing Income Requirement 3. The company marketing company go ahead with the promotion? Use the contribution margin income stater Increase in contribution margin Increase in fixed expenses Print Done Increase in operating income