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

Beginning inventory in units		5,200
Units produced		20,600
Units sold		23,500
Costs per unit:
Direct materials	$8.50
Direct labor	$3.60
Variable overhead	$1.10
Fixed overhead*	$4.35
Variable selling expenses	$2.80
Fixed selling and administrative expenses	$23,700

* Fixed overhead totals $89,610 per year.

Assume that the selling price is $29 per unit.

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Amount Descriptions

Contribution margin

Cost of goods sold

Fixed overhead

Gross margin

Operating income

Operating loss

Sales

Selling and administrative expenses

Variable cost of goods sold

Variable selling expenses

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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