Reference no: EM132516651

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

Units

Production                      50,000

Sales($18 per unit)            42,000

Inventory, January 31         8,000

Manufacturing costs:

Variable                       $575,000

Fixed                           80,000

Total                        $655,000

Selling and administrative expenses:

Variable                   $ 35,000

Fixed                        10,500

Total                    $ 45,500

Required:

Question A. Show the income statement using absorption costing.

Question B. Show the income statement using variable costing.

Question C. Explain why the profit figure is not the same.