Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn Direct labor Overhead Variable cost per unit Fixed cost (annual) Marketing, general and administrative Variable cost (per service contract completed) Administrative expenses (annual fixed cost) Sales Cost of Goods Sold: Beginning Inventory Variable Costs During the year, 10,000 service contracts were signed and 9,800 service contracts were completed. Lawn RX had no service contracts at the beginning of the year. a. Calculate reported income for management. Do not use negative signs with any answers. Absorption Costing Income Statement Fixed Cost Less: Ending Inventory Cost of Goods Sold Gross profit Overhead cost Administrative expense Net Income Sales Cost of Goods Sold: $ 1,050,000 x 1,050,000 x 100,000 57.500 x Beginning Inventory + x $80.00 $5.00 $100,000 S $6.00 $42,000 $ 1,425,000 x b. Calculate reported income for the bank. Do not use negative signs with any answers. Variable Costing Income Statement S 1,092.500 x 332.500 x 57.000 x 42.000 233.500 x 05 $ 1.425,000 x

Gi Chapter 7 Exercises and Problems Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care sen \begin{tabular}{l|r} Direct labor & $80.00 \\ Overhead & \\ Variable cost per unit & $5.00 \\ Fuxed cost (annual) & $100.000 \\ Marketing general and administrative & \\ Variable cost (per service contract completed) & $6.00 \\ \hline Administrative expenses (annual fixed cost) & $42.000 \end{tabular} During the year. 10.000 service contracts were signed and 9,800 service contracts were completed. Lawn Rx had no service contracts at the beginning of the year. a. Calculate reported income for management. Do not use negative signs with any answers. b. Calculate reported income for the bank. Do notuse negative signs with any answers. uring the year. 10,000 service contracts were signed and 9,800 service contracts were completed. Lawn RX had no service contracts at the beginning of the yea Calculate reported income for management. o not use negative signs with any answers. b. Calculate reported income for the bank. Do not use negative signs with any answers