Item 3Item 3 10 pointsSims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials$40per unitDirect labor$60per unitOverhead costs Variable$30per unitFixed$7,000,000(per year)Selling and administrative costs for the year Variable$770,000 Fixed$4,250,000 Production and sales for the year Units produced 100,000unitsUnits sold 70,000unitsSales price per unit$350per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.

Under variable costing , stock is valued on variable manufacturing cost and under absorption costing…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 18MCQ: 2-18 Use the following information for Multiple- Choice Questions 2-13 through 2-18: Last year,...

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Item 3

Item 3 10 points

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows.


Manufacturing costs
Direct materials	$	40	per unit
Direct labor	$	60	per unit
Overhead costs
Variable	$	30	per unit
Fixed	$	7,000,000	(per year)
Selling and administrative costs for the year
Variable	$	770,000
Fixed	$	4,250,000
Production and sales for the year
Units produced		100,000	units
Units sold		70,000	units
Sales price per unit	$	350	per unit

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

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