Question
The following data are for Paso Robles Company for the year ended 2009 December 31: COSTS : DIRECT MATERIAL$90000 DIRECT LABOR130000 MANUFACTURING OVERHEAD : VARIABLE45000
The following data are for Paso Robles Company for the year ended 2009 December 31:
COSTS :
DIRECT MATERIAL$90000
DIRECT LABOR130000
MANUFACTURING OVERHEAD :
VARIABLE45000
FIXED90000
SALES COMMISSION (VARIABLE)25000
SALES SALARIES (FIXED)20000
ADMINISTRATIVE EXPENSES (FIXED)35000
SELLING PRICE PER UNIT10
UNITS PRODUCED AND SOLD60000 UNITS
(a)Assume that for the above data, you had inventory of 5000 units at the end of year, contribution margin income statement and a traditional income statement.
(b)Comment on the difference between net income calculated through the above mentioned approaches.
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