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Profit Centers: Comparison of Variable and Full Costing Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in 2009. These data summarize the 2009 and 2010 operations:
2009
2010
Sales
1,800 units
2,200 units
Production:
2,000 units
Production cost
Factory-variable (per unit)
$0.60
-fixed
$1,000
Marketing-variable
$.40
Administrative-fixed
$500
Required: Prepare the following, using a spreadsheet.
1. An income statement for each year based on full costing.
2. An income statement for each year based on variable costing.
3. A reconciliation and explanation of the differences in the operating income resulting from using the full- costing method and variable-costing method.
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