The following data pertain to April operations for Josephson Company:
Beginning inventory ................................................................. 3,000
Units sold ............................................................................. 9,000
Units produced ....................................................................... 8,000
Sales price per unit ..................................................................... $ 30
Direct manufacturing cost per unit .................................................. $ 10
Fixed factory overhead-total ......................................................$40,000
Fixed factory overhead-per unit .................................................. $ 5
Commercial expense (all fixed) ....................................................$44,000
Required:
(1) Prepare an income statement using absorption costing.
(2) Prepare an income statement using direct costing.
(3) Provide computations explaining the difference in operating income between the two methods.