Jackson Company produces plastic that is used forinjection-molding applications such as gears for small motors. In2016, the first year of operations, Jackson produced 5,300 tons ofplastic and sold 3,975 tons. In 2017, the production and salesresults were exactly reversed. In each year, the selling price perton was $2,400, variable manufacturing costs were 16% of the salesprice of units produced, variable selling expenses were 10% of theselling price of units sold, fixed manufacturing costs were$3,551,000, and fixed administrative expenses were $490,000.
a) Prepare income statements for each year using variablecosting.
b) Prepare income statements for each year using absorptioncosting.
Jackson Company produces plastic that is used forinjection-molding applications such as gears for small motors. In2016, the first year of operations, Jackson produced 5,300 tons ofplastic and sold 3,975 tons. In 2017, the production and salesresults were exactly reversed. In each year, the selling price perton was $2,400, variable manufacturing costs were 16% of the salesprice of units produced, variable selling expenses were 10% of theselling price of units sold, fixed manufacturing costs were$3,551,000, and fixed administrative expenses were $490,000.
a) Prepare income statements for each year using variablecosting.
b) Prepare income statements for each year using absorptioncosting.
Related questions
Thornton Glass Company makes stained glass lamps. Each lamp that it sells for $316.60 per lamp requires $16.60 of direct materials and $70.40 of direct labor. Fixed overhead costs are expected to be $190,500 per year. Thornton Glass expects to sell 1,000 lamps during the coming year. Selling and administrative expenses were zero.
Required
A. Prepare income statements using absorption costing, assuming that Thornton Glass makes 1,000, 1,250, and 1,500 lamps during the year.
| |||||||||||||||||||||||||||||||||||||
B. Prepare income statements using variable costing, assuming that Thornton Glass makes 1,000, 1,250, and 1,500 lamps during the year
| |||||||||||||||||||||||||||||||||||||
