Johnson Realty bought a 2,000-acre island for $10,000,000 and divided it into 200 equal size lots.
The average selling price was $160,000 per lot during 20X5 when 50 lots were sold.
During 20X6, the company bought another 2,000-acre island and developed it exactly the same way. Lot sales in 20X6 totaled 300 with an average selling price of $160,000. All costs were the same as in 20X5.
Required:
Prepare income statements for both years using both absorption and variable costing methods.

Question

Johnson Realty bought a 2,000-acre island for $10,000,000 and divided it into 200 equal size lots.
  The average selling price was $160,000 per lot during 20X5 when 50 lots were sold.
During 20X6, the company bought another 2,000-acre island and developed it exactly the same way. Lot sales in 20X6 totaled 300 with an average selling price of $160,000. All costs were the same as in 20X5.
Required:
Prepare income statements for both years using both absorption and variable costing methods.

Quizplus · Accepted Answer

The Answer of Johnson Realty bought a 2,000-acre island for $10,000,000 and divided it into 200 equal size lots.
  The average selling price was $160,000 per lot during 20X5 when 50 lots were sold.
During 20X6, the company bought another 2,000-acre island and developed it exactly the same way. Lot sales in 20X6 totaled 300 with an average selling price of $160,000. All costs were the same as in 20X5.
Required:
Prepare income statements for both years using both absorption and variable costing methods.

Johnson Realty Bought a 2,000-Acre Island for $10,000,000 and Divided