Reference no: EM132649937
Jade Company manufactures and sells premium tomato juice by the gallon. The company just finished its first year of operations. The following data relates to this first year:
Number of gallons produced................................75,000
Number of gallons sold................................70,000
Sales price................................$3.00 per gallon
Unit product cost under variable costing........................$1.45 per gallon
Total contribution margin................................$84,000
Total fixed manufacturing overhead cost........................$63,000
Total fixed selling and administrative expense ...............$10,500
Required:
Question a. Using the absorption costing method, prepare the company's income statement for the year.
Question b. Using variable costing method, prepare the company's income statement for the year.
Question c. For decision making purpose, which is the better method? Why?