The Hampshire Company manufactures umbrellas that sell for $12.50 each. In 2014, the company made and sold 60,000 umbrellas. The company had fixed manufacturing costs of $216,000. It also had fixed costs for administration of $79,525. The per-unit costs of each umbrella are as follows: Direct Materials: $3.00 Direct Labor: $1.50 Variable Manufacturing Overhead: $0.40 Variable Selling Expenses: $1.10 Section II: Inventory Management The information below represents the beginning and ending inventory amounts along with the production and sales for the month in umbrella units. Beginning Inventory: 0 Umbrellas Production: 80,000 Umbrellas Sales: 60,000 Umbrellas Ending Inventory: 20,000 Umbrellas Using the information provided above and the costs and sales information provided in Section I, complete the following in the Hampshire Company Spreadsheet in order to assist you in responding to all components of Section II: Prepare a variable costing income statement. Prepare an absorption costing income statement.

Units $ Sales X $ $ Variable Cost of Goods Sold: Beginning Inventory $ Direct Materials X $ $ Direct Labor X $ $ Manufacturing Overhead X $ $ Total Variable Costs $ Cost of Good Available for Sale $ Deduct Ending Inventory X $ $ Variable Costs of Goods Sold $ Variable Selling Costs X $ $ $ Contribution Margin $ Fixed Costs: Fixed Manufacturing Costs $ Fixed Administrative Costs $ Operating Income $ Requirement 2 Hampshire Company Absorption Costing Income Statement Units $ Sales X $ $ Variable Cost of Goods Sold: Beginning Inventory $ Direct Materials X $ $ Direct Labor X $ $ Manufacturing Overhead X $ $ Total Variable Costs $ Allocated Fixed Manufacturing Costs X $ $ Cost of Good Available for Sale $ Deduct Ending Inventory X $ $ Costs of Goods Sold $ Gross Margin $ Fixed Costs: Variable Selling Costs X $ $ Fixed Administrative Costs $ Operating Income $