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Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is 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 & 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. 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
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