Question
Waltman Company just ended its first year of operations. We are hired to help with the company's reporting. The Tableau Dashboard provides data for our
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Waltman Company just ended its first year of operations. We are hired to help with the company's reporting. The Tableau Dashboard provides data for our analysis.
Direct Materials:$7 per unit/Direct Labor: $9 per unit/ Variable Overhead:$4 per unit/Fixed Overhead Cost $1000,000 per year/Selling & Administrative Costs: Variable-$85,000 per year, Fixed-$45,000/ Units Sold: 7,500 units/ Units Produced:10,000 units 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. 3. Assuming the managers bonus is based on income, which costing method would the manager prefer in the current year? 4. Assuming the managers bonus is based on minimizing the cost of ending inventory, which costing method would the manager prefer in the current year?
Prepare an income statement for the year using variable costing.
WALTMAN CO. Income Statement (Variable Costing) For Year Ended December 31 Income WALTMAN CO. Income Statement (Absorption Costing) For Year Ended December 31 Income 3. Assuming the managers bonus is based on income, which costing method would the manager prefer in the current year? 4. Assuming the managers bonus is based on minimizing the cost of ending inventory, which costing method would the manager prefer in the current year?
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