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Problem - On January 1 of the current year, C. F. Hartley Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:
Units
Production
Sales ($18 per unit) 50,000
Inventory, January 31 42,000
8,000
Total Cost or Expense
Manufacturing costs:
Variable $575,000
Fixed 75,000
Total $ 650,000
Selling and administrative expenses:
Variable $ 33,600
Fixed 10,500
Total $ 44,100
(a) Prepare an income statement in accordance with absorption costing.
(b) Prepare an income statement in accordance with variable costing.
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