Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2Skip to question [The following information applies to the questions displayed below.]Cool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $120 per unit. Direct materials$ 48per unitDirect labor$ 18per unitVariable overhead$ 6per unitFixed overhead$ 420,000per yearVariable selling and administrative expenses$ 12per unitFixed selling and administrative expenses$ 110,000per year Exercise 19-3 (Algo) 1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.2a. Assume the company uses variable costing. Determine its total product cost per unit.2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

An income statement is a financial report that indicates the revenue and expenses of a business. It…

Answered: Exercise 19-3 (Algo) Income statement…

Accounting (Text Only)

26th Edition

ISBN:9781285743615

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter21: Cost Behavior And Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.28EX: Appendix Absorption costing income statement On June 30, the end of the first month of operations,...

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Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2

Skip to question

[The following information applies to the questions displayed below.]

Cool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $120 per unit.

Direct materials	$ 48	per unit
Direct labor	$ 18	per unit
Variable overhead	$ 6	per unit
Fixed overhead	$ 420,000	per year
Variable selling and administrative expenses	$ 12	per unit
Fixed selling and administrative expenses	$ 110,000	per year

Exercise 19-3 (Algo)

1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.

2a. Assume the company uses variable costing. Determine its total product cost per unit.

2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

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