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    Absorption costing income statement

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    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.

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    Solution Summary

    Solution assists in preparing an income statement under absorption and variable costing.