Prepare stonehenge income statement under absorption costing

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Reference no: EM131139716

Question:

Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown below:

Production costs:
Direct labor	$.30 per unit
Direct materials	$1.80 per unit
Variable overhead	$495,000
Fixed overhead	$450,000
Non-production costs:
Variable selling expense	$18,000
Fixed administrative expenses	$53,000

Required:
a) Prepare Stonehenge"s income statement under absorption costing.

b) Prepare Stonehenge"s income statement under variable costing.

c) Reconcile the two net incomes.

Reference no: EM131139716

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