Variable and Absorption Costing Summarized data for 2019 (the first year of operations) for Gor- man Products, Inc., are as follows: Sales (70,000 units).. Production costs (80,000 units): Direct materials. Direct labor Manufacturing overhead: Variable. Fixed. Operating expenses! Variable. Fixed... CIN * MNN *** MUN 1 KIN COCT HOM N Depreciation on equipment. Real estate taxes. 164 * ME [14 EE CI WREN NICCE Ce INIC COMM CENG.. WMN BUON WILM POD ** CICIBUBIOCHE TEBUCHUICHBACHE C. MERIC WH 120 17 IN TRINC Personal property taxes (on inventory and equipment) Personnel department expenses. M CIN 1 MI jel 129 300 FURBINE M HEJURURGRIET 19 14 12 13 15 CE *.***. IN 10 L 12 33 BLI 100 M TESBISTARE E N for $2,800,000 880,000 720,000 544,000 320,000 175,000 240,000 60,000 18,000 28,800 30,000 Required Prepare an income statement based on full absorption costing. Prepare an income statement based on variable costing. Assume that you must decide quickly whether to accept a special one time order for 1.000 units for $25 unit. Which income statement presents the most relevant data? Determine the appar- ent profit or loss on the special order based solely on these data. d. If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why?

Variable and Absorption Costing Summarized data for 2019 (the first year of operations) for Gor- man Products, Inc., are as follows: Sales (70,000 units). $2,800,000 Production costs (80,000 units): Direct materials.. Direct labor. Manufacturing overhead: Variable. Fixed. 880,000 720,000 544,000 320,000 Operating expenses: Variable.. 175,000 Fixed... 240,000 Depreciation on equipment. 60,000 Real estate taxes 18,000 Personal property taxes (on inventory and equipment) Personnel department expenses 28,800 30,000 tement Required a. Prepare an income statement based on full absorption costing. b. Prepare an income statement based on variable costing. Assume that you must decide quickly whether to accept a special one time order for 1,000 units for $25 per unit. Which income statement presents the most relevant data? Determine the appar- ent profit or loss on the special order based solely on these data. d. If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why?