Reference no: EM133066110

Question - Variable and Absorption Costing-Service Company - Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $157. The variable and fixed cost data are as follows:

Direct labor $100.00

Overhead

Variable cost per unit $9

Fixed cost $100,000

Marketing, general and administrative

Variable cost (per service contract completed) $10.00

Administrative expenses (fixed- annual cost) $42,000

During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year.

a. Calculate reported income for management.

b. Calculate reported income for the bank.