Variable and Absorption Costing$-$Service Company

Rocky's Automotive specializes in performing automobile safety checks. After the company's first year of operations, its accountant prepared the following summarized data report for the safety checks for the year

Sales $(7,000$ safetychecks$)$ $$1,120,000$

Production costs $(7,010$ safety checks$)$

Direct labor $785,120\mathrm{.}00$

Shop overhead

Variable $179,456\mathrm{.}00$

Fixed $112,160\mathrm{.}00$

Operating expenses

Variable $33,648\mathrm{.}00$

Fixed $25,600\mathrm{.}00$

a$.$ Prepare an income statement based on full absorption costing.

Only use a negative sign with your answer for net income $($loss$),$ if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable.

Absorption Costing Income Statement

Sales Answer

Cost of Goods Sold:

Beginning Inventory Answer

Direct labor Answer

Answer

Answer

Less: Ending Inventory Answer

Cost of Goods Sold Answer

Answer

Answer

Answer

Answer

Net Income $($Loss$)$ Answer

b$.$ Prepare an income statement based on variable costing.

Only use a negative sign with your answer for net income $($loss$),$ if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable.

Variable Costing Income Statement

Sales Answer

Variable cost of Goods Sold:

Beginning Inventory Answer

Direct labor Answer

Answer

Answer

Less: Ending Inventory Answer

Variable cost of goods sold Answer

Answer

Answer

Answer

Answer

Fixed costs:

Answer

Answer

Operating expenses Answer

Total Fixed Cost Answer

Net Income $($Loss$)$ Answer

c$.$ Assume that you must decide quickly whether to accept a special one$-$time order for $20$ safety checks on local police cars for $$128$ per safety check.

Which income statement presents the most relevant data? Answer

Determine the apparent profit or loss on the special order based solely on these data.

Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number.

$Answer