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E 10- 3 Using variable costing and absorption costing The chief executive officer of Acadia,...

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Accounting

E 10- 3 Using variable costing and absorption costing The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the companys absorption costing. The data follow:

Direct materials............................................. $90,000

Direct labor................................................. 120,000

Variable factory overhead..................................60,000

Fixed factory overhead.....................................150,000

Fixed marketing and administrative expense. . . . . . . . . . . . . .180,000

The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.

1. Prepare an income statement using variable costing.

2. Prepare an income statement using absorption costing. (Round unit costs to three decimal places.)

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