Reference no: EM13590583

Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below:                                                                                                                                                                      

Units in beginning inventory	2,000
Units produced	9,000
Units sold	10,000
Sales	$100,000

Less cost of goods sold:                                                                                                                                                                                                                                                                                                                                   

Beginning inventory	12,000
Add cost of goods manufactured	54,000
Goods available for sale	66,000
Less ending inventory	6,000
Cost of goods sold	60,000
Gross margin	40,000
Less selling and admin. expenses	28,000
Net operating income	$12,000

Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.  

Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.