Solution-Prepare income statements under variable costing

Prepare income statements under variable costing

Reference no: EM132562232

VARIABLE AND ABSORPTION COSTING

Pimlico Ltd makes trendy, high-quality, moderately priced watches. You are Pimlico's senior financial analyst and management asks you to recommend a method of inventory costing. The CFO will use your recommendation to prepare Pimlico's 2018 income statement. The following data are for the year ended 31 December 2018:

Beginning inventory, 1 January 2018 90 000 units

Ending inventory, 31 December 2018 34 000 units

2018 sales 433 000 units

Selling price (to distributor) $24.00 per unit

Variable production cost per unit, including direct materials $5.40 per unit

Variable operating (marketing) cost per unit sold $1.20 per unit sold

Fixed production costs $1 852 200

Denominator-level machine-hours 6 300

Budgeted production rate 60 units per machine-hour

Fixed operating (marketing) costs $1 130 000

Required

Question 1. Prepare income statements under variable and absorption costing for the year ended 31 December 2018.

Reference no: EM132562232

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Prepare income statements under variable costing

Reference no: EM132562232

Reference no: EM132562232

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