Rey Company’s only product sells for $222 per unit. Data for its first year of operations follow. Direct materials$ 26per unitDirect labor$ 34per unitVariable overhead$ 12per unitFixed overhead$ 364,000per yearVariable selling and administrative expenses$ 24per unitFixed selling and administrative expenses$ 212,000per yearUnits produced and sold26,000units 1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing. REY COMPANYIncome Statement (Absorption Costing) IncomeREY COMPANYIncome Statement (Variable Costing)

As per the absorption costing method, the product cost includes fixed and variable manufacturing…

Answered: Rey Company’s only product sells for…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 12Q: What is the primary difference between variable costing and absorption costing?

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Rey Company’s only product sells for $222 per unit. Data for its first year of operations follow.

Direct materials	$ 26	per unit
Direct labor	$ 34	per unit
Variable overhead	$ 12	per unit
Fixed overhead	$ 364,000	per year
Variable selling and administrative expenses	$ 24	per unit
Fixed selling and administrative expenses	$ 212,000	per year
Units produced and sold	26,000	units

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

REY COMPANY
Income Statement (Absorption Costing)

Income
REY COMPANY
Income Statement (Variable Costing)

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