Rey Company’s single product sells at a price of $216 per unit. Data for its single product for its first year of operations follow. Direct materials$20per unitDirect labor$28per unitOverhead costs Variable overhead$6per unitFixed overhead per year$160,000per yearSelling and administrative expenses Variable$18per unitFixed$200,000per yearUnits produced and sold 20,000units 1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing.

Answered: Rey Company’s single product sells at a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 29P: Jellison Company had the following operating data for its first two years of operations: Jellison...

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Rey Company’s single product sells at a price of $216 per unit. Data for its single product for its first year of operations follow.


Direct materials	$	20	per unit
Direct labor	$	28	per unit
Overhead costs
Variable overhead	$	6	per unit
Fixed overhead per year	$	160,000	per year
Selling and administrative expenses
Variable	$	18	per unit
Fixed	$	200,000	per year
Units produced and sold		20,000	units

1. Prepare an income statement for the year using absorption costing
2. Prepare an income statement for the year using variable costing.

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