Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown in the following table:
$$\begin{array} { | l | l | }
\hline \text { Production costs } & \
\hline \text { Direct materials } & \$ 1.80 \text { per unit } \
\hline \text { Direct labor } & \$ .30 \text { per unit } \
\hline \text { Variable overhead } & \$ 495,000 \text { in total } \
\hline \text { Fixed overhead } & \$ 450,000 \text { in total } \
\hline \text { Non production costs } & \
\hline \text { Variable selling and administrative } & \$ 18,000 \text { in total } \
\hline \text { Fixed selling and administrative } & \$ 53,000 \text { in total } \
\hline
\end{array}$$ a. Prepare Stonehenge's December 31st income statement for the current year under absorption costing.
b. Prepare Stonehenge's December 31st income statement for the current year under variable costing.

Question

Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown in the following table:
 $$\begin{array} { | l | l | } 
\hline \text { Production costs } & \
\hline \text { Direct materials } & \$ 1.80 \text { per unit } \
\hline \text { Direct labor } & \$ .30 \text { per unit } \
\hline \text { Variable overhead } & \$ 495,000 \text { in total } \
\hline \text { Fixed overhead } & \$ 450,000 \text { in total } \
\hline \text { Non production costs } & \
\hline \text { Variable selling and administrative } & \$ 18,000 \text { in total } \
\hline \text { Fixed selling and administrative } & \$ 53,000 \text { in total } \
\hline
\end{array}$$ a. Prepare Stonehenge's December 31st income statement for the current year under absorption costing.
b. Prepare Stonehenge's December 31st income statement for the current year under variable costing.

Quizplus · Accepted Answer

The Answer of Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown in the following table:
 $$\begin{array} { | l | l | } 
\hline \text { Production costs } & \
\hline \text { Direct materials } & \$ 1.80 \text { per unit } \
\hline \text { Direct labor } & \$ .30 \text { per unit } \
\hline \text { Variable overhead } & \$ 495,000 \text { in total } \
\hline \text { Fixed overhead } & \$ 450,000 \text { in total } \
\hline \text { Non production costs } & \
\hline \text { Variable selling and administrative } & \$ 18,000 \text { in total } \
\hline \text { Fixed selling and administrative } & \$ 53,000 \text { in total } \
\hline
\end{array}$$ a. Prepare Stonehenge's December 31st income statement for the current year under absorption costing.
b. Prepare Stonehenge's December 31st income statement for the current year under variable costing.

Stonehenge Inc A Prepare Stonehenge's December 31st Income Statement for the Current