Andrea Cookie Company produced 5,000 cases of cookies this year. It sold 4,000 cases for $18 each. There were no beginning inventories. Variable manufacturing costs were $30,000, and fixed manufacturing expenses were $20,000. Selling and administrative expenses were $5,000, all fixed.
Required:
a. Prepare income statements using the variable costing and absorption costing.
b. Reconcile the net income under absorption and variable costing.

Question

Andrea Cookie Company produced 5,000 cases of cookies this year. It sold 4,000 cases for $18 each. There were no beginning inventories. Variable manufacturing costs were $30,000, and fixed manufacturing expenses were $20,000. Selling and administrative expenses were $5,000, all fixed. 
Required:
a. Prepare income statements using the variable costing and absorption costing.
b. Reconcile the net income under absorption and variable costing.

Quizplus · Accepted Answer

The Answer of Andrea Cookie Company produced 5,000 cases of cookies this year. It sold 4,000 cases for $18 each. There were no beginning inventories. Variable manufacturing costs were $30,000, and fixed manufacturing expenses were $20,000. Selling and administrative expenses were $5,000, all fixed. 
Required:
a. Prepare income statements using the variable costing and absorption costing.
b. Reconcile the net income under absorption and variable costing.

Andrea Cookie Company Produced 5,000 Cases of Cookies This Year