please explain in steps thanks d. Explain why there is or is not a difference in the net income amounts in the twoincome statements.e. Explain why Empey Manufacturing might want to prepare both an absorption-costing income statement and a variable-costing income statement. Calculate the product cost under absorption costing and variable costing, prepare anabsorption-costing income statement, and compare the usefulness of the variable-costing format versus the absorption-costing format.E8.22 (LO 1, 2, 3) Empey Manufacturing produces towels to be sold as souvenirs atsporting events throughout the world. Assume that units produced equalled units soldin 2022. The company's variable-costing income statement and other data are asfollows:EMPEY MANUFACTURINGIncome StatementYear Ended December 31, 2022Variable CostingSales (260,700 units)$521,400Variable cost of goods sold$255,486Variable selling expenses31,284Variable administrative expenses36,498 323,268Contribution margin198,132Fixed manufacturing overhead96,459Fixed selling expenses38,500Fixed administrative expenses42,625177,584Net income$ 20,548Unit selling priceVariable costs per unitDirect materialsDirect labourVariable overheadVariable selling expensesVariable administrative expensesInstructions$2.000.260.340.380.120.14

Absorption costing and variable costing are two costing methods under which the major difference…

d. Explain why there is or is not a difference in the net income amounts in the two income statements. e. Explain why Empey Manufacturing might want to prepare both an absorption- costing income statement and a variable-costing income statement.

d. Explain why there is or is not a difference in the net income amounts in the two income statements. e. Explain why Empey Manufacturing might want to prepare both an absorption- costing income statement and a variable-costing income statement.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 22E: Total cost method of product pricing Based on the data presented in Exercise 17, assume that Smart...

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