Zeflax manufactures insulated plastic bottles for bikes that the company sells for $ 4.00 per bottle. Last
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a. Prepare income statements for Zeflax for last year and this year using absorption costing. Assume that Zeflax’s only costs are the fixed and variable manufacturing costs given in the problem.
b. Prepare income statements for Zeflax for last year and this year using variable costing. Assume that Zeflax’s only costs are the fixed and variable manufacturing costs given in the problem.
c. Explain to the president of Zeflax in nontechnical terms why the financial statements pre-pared by the accountant in part (a) are not in error. In other words, explain to the president why net income fell this year from last year even though Zeflax sold more bottles.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
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