Reference no: EM132579538

Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results:

Sales (16,800 x $58) $974,400

Manufacturing costs (16,800 units):

Direct materials 588,000

Direct labor 139,440

Variable factory overhead 65,520

Fixed factory overhead 77,280

Fixed selling and administrative expenses 21,000

Variable selling and administrative expenses 25,400

• The company is evaluating a proposal to manufacture 18,400 units instead of 16,800 units, thus creating an Inventory, October 31 of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

Question 1. Prepare estimated income statement, comparing operating results if 16,800 and 18,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter "0".

Question 2. Prepare estimated income statement, comparing operating results if 16,800 and 18,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter "0".