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Hasselback, Inc., produced 175,000 units and prepared the following income report using absorption costing (numbers in $1,000s):
Sales (100,000 Units)
$15,000
Less Cost of Goods Sold
Direct Materials
$1,200
Direct Labor
300
Unit-related overhead
900
Other overhead
4,000
6,400
Gross Margin
8,600
Less other operating costs
Variable Selling & Administrative
600
Fixed Selling & Administrative
2,000
Profit
$6,000
Required:
1. Determine Hasselback's profit using unit-variable costing.
2. Determine Hasselback's profit using throughput costing.
3. Which method do you think presents the most reliable picture of current earnings? Why?
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