Prepare an income statement according to absorption costing

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Question - Income statements under absorption costing and variable costing

Digital Edge Inc. assembles and sells MP3 players. The company began operations on May 1, 2010, and operated at 100% of capacity during the first month. The following data summarize the results for May:

Sales (16,500 units)


$2,475,000

Production costs (21,000 units):



Direct materials

$1,165,500


Direct labor

558,600


Variable factory overhead

279,300


Fixed factory overhead

186,900

2,190,300

Selling and administrative expenses:



Variable selling and administrative expenses

$339,500


Fixed selling and administrative expenses

131,400

470,900

a. Prepare an income statement according to the absorption costing concept. Enter all amounts as positive numbers.

b. Prepare an income statement according to the variable costing concept. Enter all amounts as positive numbers.

Reference no: EM131817558

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