The Tomlinson Company manufactures trendy, high-quality Requirements moderately priced watches. As Tomlinson's senior financial 1. Prepare income statements under variable and analyst, you are asked to recommend a method of inventory costing. The CFO will use your recommendation absorption costing for the year ended to prepare Tomlinson's 2017 income statement. The following data are for the year ended December 31, 2017: December 31, 2017. E:8 (Click the icon to view the data.) 2. What is Tomlinson's operating income as percentage of revenues under each costing method? Assume standard costs per unit are the same for units in 3. Explain the difference in operating income beginning inventory and units produced during the year. between the two methods. Also, assume no price, spending, or efficiency variances. 4. Which costing method would you recommend Any production-volume variance is written off to cost of to the CFO? Why? goods sold in the month in which it occurs. Requirement 1. Prepare income statements under variable and absorption costing for the year ended December 31 , 2017. Begin by preparing the income statement under variable costing for the year ended December 31,2017 . Complete the top half of the income statement first, then complete the bottom portion. The Tomlinson Company manufactures trendy, high-quality Requirements moderately priced watches. As Tomlinson's senior financial 1. Prepare income statements under variable and analyst, you are asked to recommend a method of absorption costing for the year ended inventory costing. The CFO will use your recommendation December 31, 2017. to prepare Tomlinson's 2017 income statement. The following data are for the year ended December 31, 2017: 2. What is Tomlinson's operating income as percentage of revenues under each costing method? Assume standard costs per unit are the same for units in 3. Explain the difference in operating income beginning inventory and units produced during the year. between the two methods. Also, assume no price, spending, or efficiency variances. 4. Which costing method would you recommend Any production-volume variance is written off to cost of to the CFO? Why? goods sold in the month in which it occurs. Data table