Williams Company has been producing and selling 100,000 units per year. They have excess capacity. The following budget was prepared for the next year: $\begin{array}{lc}
\text { Selling price per unit } & \$ 1250 \
\text { Variable cost per unit: } & \
\text { Direct materials } & \$ 5.00 \
\text { Direct labor } & 3.00 \
\text { Overhead } & 1.00 \
\text { Selling and administrative } & 25
\end{array}$ Fixed costs in total:
Overhead $\quad\quad\$ 80,000$
Sellingand administrative $\quad 35,000$ Required:
a. Prepare an income statement using the contribution approach.
b. Prepare an income statement using the absorption approach.

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The Answer of Williams Company has been producing and selling 100,000 units per year. They have excess capacity. The following budget was prepared for the next year: $\begin{array}{lc}
\text { Selling price per unit } & \$ 1250 \
\text { Variable cost per unit: } & \
\text { Direct materials } & \$ 5.00 \
\text { Direct labor } & 3.00 \
\text { Overhead } & 1.00 \
\text { Selling and administrative } & 25
\end{array}$ Fixed costs in total:
Overhead $\quad\quad\$ 80,000$
Sellingand administrative $\quad 35,000$ Required:
a. Prepare an income statement using the contribution approach.
b. Prepare an income statement using the absorption approach.

Williams Company Has Been Producing and Selling 100,000 Units Per