Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,300 each) for 2019. The workstations’ manufacturing costs include the following. Direct materials$750 per unit Direct labor$400 per unit Variable overhead$60 per unit Fixed overhead$24,000 per year The selling expenses related to these workstations follow. Variable selling expenses$45per unit Fixed selling expenses$3,500per year Santana is considering how many workstations to produce in 2019. She is confident that she will be able to sell any workstations in her 2019 ending inventory during 2020. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.Required:1. Complete the following income statements using absorption costing.2. Complete the following income statements using variable costing.

Prepare income statements using absorption costing as follows: Result:

Answered: Santana Rey expects sales of Business…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

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Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,300 each) for 2019. The workstations’ manufacturing costs include the following.


Direct materials	$	750	per unit
Direct labor	$	400	per unit
Variable overhead	$	60	per unit
Fixed overhead	$	24,000	per year

The selling expenses related to these workstations follow.


Variable selling expenses	$	45	per unit
Fixed selling expenses	$	3,500	per year

Santana is considering how many workstations to produce in 2019. She is confident that she will be able to sell any workstations in her 2019 ending inventory during 2020. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.

Required:
1. Complete the following income statements using absorption costing.
2. Complete the following income statements using variable costing.

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