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CoursHeroTranscribedText: Dirt Free Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For...

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Accounting

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CoursHeroTranscribedText: Dirt Free Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For 2020, Dirt Free budgeted to produce and sell 22,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2020 are given as follows:A B 1 Units produced 17,000 2 Units sold 15,500 3 Selling price $ 450 4 Variable costs: 5 Manufacturing cost per unit produced: 6 Direct materials $ 31 Direct manufacturing labor 24 8 Manufacturing overhead 58 9 Marketing cost per unit sold 45 10 Fixed costs: 11 Manufacturing costs $ 1,276,000 12 Administrative costs 1,024,600 13 Marketing costs 1,479,000 Print Done 1. Prepare a 2020 income statement for Dirt Free Company using variable costing. 2. Prepare a 2020 income statement for Dirt Free Company using absorption costing. 3. Explain the differences in operating incomes obtained in requirements 1 and 2. 4. Dirt Free's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modifications could Dirt Free management make to improve such a plan? Explain briefly

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