ZBest Mfg. reports the following data for 2017:
Direct Materials Cost		$7	per unit		Units Produced		25,000	units
Direct Labor Cost		$11	per unit		Units Sold		18,000	units
Variable Overhead		$6	per unit		Variable Selling and Admin Expenses		$4	per unit
Fixed Overhead		$725,000	per year		Fixed Selling and Admin Expenses		$125,000	per year
Sales Price		$90	per unit
1.Prepare an income statement for 2017 under absorption costing
2.Prepare an income statement for 2017 under variable costing
3. Explain when absorption costing is a preferred method over variable costing?
4. Explain when variable costing is a preferred method over absorption costing?
	Zbest MFG					Zbest MFG
	Income Statement (Absorption Costing)					Income Statement (Variable Costing)
	For the Year Ended December 31, 2017					For the Year Ended December 31, 2017
Sales			$1,620,000		Sales
Cost of Goods Sold					Variable Expenses
Gross Margin						Variable Product Costs
Selling and Admin Expenses						Variable SG&A
Net Income					Contribution Margin
					Fixed Expenses
						Fixed Overhead
**** COGS:						Fixed SG&A
DM	$7				Net Income
DL	$11
VOH	$6				DM
FOH	$29				DL
PRODUCT COST PER UNIT	$53				VOH