Below is listed certain elements of the Boylston Company's first year of activity:
Selling price per unit $35
Direct materials per unit $8
Direct labor per unit $6
Variable overhead per unit $2
Fixed factory overhead per year $270,000
Variable selling expenses $ 3 per unit
Fixed selling expenses $65,000
During the year Boylston sold 29,000 units while actual and budgeted production totaled 30,000 units.
A. Prepare an absorption costing income statement.
B. Prepare a direct (variable) costing income statement.
C. Explain (reconcile) any difference in net income reported in (A) and (B) above.
Solution assists in preparing an income statement under absorption and variable costing.