COMMERCE 2AB3 Chapter Notes - Chapter 2: Earnings Before Interest And Taxes, Total Absorption Costing
11 Feb 2015
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Tudor inc. was concerned that increased sales did not result in increased profits for 2015. Both variable unit and total fixed manufacturing costs for 2014 and 2015 remained constant at and. In 2014 the company produced 100,000 units and sold 80,000 units at a price of per unit. In 2015 the company made 70,000 units and sold. Selling and administrative expenses were all fixed at ,000 each year. Required: prepare income statements for each year using absorption costing, prepare income statements for each year using variable costing, explain why the income was different each year using the two methods. S&f co started its business on january 1, 2014. On december 31, 2014, the company"s records show the following costs per unit: Costing: , , , , normal company pays a sales commission of 4% on each unit sold. Total fixed manufacturing overhead was ,000 and 10,000 units were produced.
