Lowery Company developed the following unit information for January, 2010, its first month of operations:
During January, 12,000 units were produced and 9,000 units were sold.
Instructions
(a) Prepare an income statement under the variable costing approach using the CVP format.
(b) What would be the net income (loss) if the absorption cost approach had been used? Explain any income difference between absorption and variable costing.

Question

Lowery Company developed the following unit information for January, 2010, its first month of operations:  
During January, 12,000 units were produced and 9,000 units were sold.
Instructions
(a) Prepare an income statement under the variable costing approach using the CVP format.
(b) What would be the net income (loss) if the absorption cost approach had been used? Explain any income difference between absorption and variable costing.

Quizplus · Accepted Answer

The Answer of Lowery Company developed the following unit information for January, 2010, its first month of operations:  
During January, 12,000 units were produced and 9,000 units were sold.
Instructions
(a) Prepare an income statement under the variable costing approach using the CVP format.
(b) What would be the net income (loss) if the absorption cost approach had been used? Explain any income difference between absorption and variable costing.

Lowery Company Developed the Following Unit Information for January, 2010