Zinkerer Inc. creates toys for kids.

Zink is wondering why managers indicate a choice must be made

between Variable Costing and Absorption costing.

You are given the following, and are to provide income statements, using both methods.

Beg. Inventory

Ending Inventory

Sales

Sales price

Manufacturing variable costs

Sales variable costs

Manufacturing Fixed costs

Marketing Fixed costs

Budgeted Machine Hours

Standard production rate

Throughput $-$ budgeted Fixed Cost Overhead

a$)4$ marks Prepare an Income Statement using both methods of costing.

b$)4$ marks Which method is chosen over the other, and why?