The following information pertains to Chacon Inc. for last year:

Beginning inventory in units		5,000
Units produced		20,400
Units sold		23,400
Costs per unit:
Direct materials	$7.80
Direct labor	$3.70
Variable overhead	$1.40
Fixed overhead*	$4.25
Variable selling expenses	$3.60
Fixed selling and administrative expenses	$23,800

* Fixed overhead totals $86,700 per year.

Assume that the selling price is $28 per unit.

Required:

1.

Calculate operating income using absorption costing.

2.

Calculate operating income using variable costing.

1. Calculate operating income using absorption costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Chacon Inc.

Absorption-Costing Income Statement

For Last Year

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2. Calculate operating income using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Chacon Inc.

Variable-Costing Income Statement

For Last Year

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