Reference no: EM132510343

Toy Centre Inc. sells Frisbees. In 2020, the company produced 3,000,000 units but sold only 2,500,000 units. The unit selling price was $1.50 per Frisbee. The company had no beginning inventory.

Costs and expenses for the year ended December 31, 2020 were as follows:
Variable costs per unit:

Direct materials                                           $0.45
Direct labour                                                 0.08
Variable manufacturing overhead                       0.17
Variable selling and administrative expenses          0.22

Annual fixed costs and expenses:

Manufacturing overhead                             $360,000
Selling and administrative expenses                  330,000

Question 1: Prepare an income statement using absorption costing.

Question 2: Prepare an income statement using variable costing.