ADM 2341 Lecture Notes - Lecture 8: Income Statement, Variable Cost, Earnings Before Interest And Taxes

• School: University of Ottawa
• Department: Administration
• Course: ADM 2341
• Professor: Tiemei L I

Document Summary

The vice president (vp) of sales at wildlife corporation has received the income statement for. This statement, which was prepared on the basis of variable costing, is reproduced below. The firm has just adopted a variable costing system for internal reporting. The controller attached the following notes to the statements: The unit rate for fixed manufacturing costs is based on monthly production of 150,000 units. Production for january was 50,000 units above sales. The vp is uncomfortable with using variable costing and wonders what operating income would have been using absorption costing. (a) (b) Prepare the september income statement using absorption costing. Reconcile and explain the difference between the net income figure when variable costing and absorption costing are used.