Reference no: EM13588032

Marotta Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2010, the first year of operations, Marotta produced 4,000 tons of plastic and sold 3,000 tons. In 2011, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were $2,400,000, and fixed administrative expenses were $600,000. Prepare income statements under absorption costing and variable costing for a company with beginning inventory, and reconcile differences.