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The Fidgoseld Company manulactures trendy, high-qualiy, moberately priced watches. As Fidgeflelds senlor financial andyst, you wee asked to recommend a method of inventiory costing. The
The Fidgoseld Company manulactures trendy, high-qualiy, moberately priced watches. As Fidgeflelds senlor financial andyst, you wee asked to recommend a method of inventiory costing. The chiaf financial elficer (CFO) wal use your iecommendation to prepare Ridgefeld's 2020 income statement. The following data are for the year ended December 31 ; 2020 : (Cick the icon to view the data) (Ci) (Cick the icon to view the assumptions.) Read the reguicements Requirement 1. Prepare income statements under variable and abeorbion costing for the year ended December 31, 2060. Begin by preparing the income statement under variable costing for the year ended December 31.2020 . Complete the top hal of the income stabement frst, then complete the botom porton. Data table Assumptions Assume standard costs per unit are the same for units in beginning inventory and units produced during the year. Also, assume no price, spending, or efficiency variances. Any production-volume variance is written off to cost of goods sold Requirements 1. Prepare income statements under variable and absorption costing for the year ended December 31, 2020. 2. What is Ridgefield's operating income as percentage of revenues under each costing method? 3. Explain the difference in operating income between the two methods. 4. Which costing method would you recommend to the CFO? Why
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