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Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.
| | | | |
| Sales price per unit | $ | 320 | per unit |
| Units produced this year | | 105,000 | units |
| Units sold this year | | 108,500 | units |
| Units in beginning-year inventory | | 3,500 | units |
| Beginning inventory costs | | | |
| Variable (3,500 units $135) | $ | 472,500 | |
| Fixed (3,500 units $75) | | 262,500 | |
| Total | $ | 735,000 | |
| Manufacturing costs this year | | | |
| Direct materials | $ | 48 | per unit |
| Direct labor | $ | 60 | per unit |
| Overhead costs this year | | | |
| Variable overhead | $ | 3,600,000 | |
| Fixed overhead | $ | 7,200,000 | |
| Selling and administrative costs this year | | | |
| Variable | $ | 1,450,000 | |
| Fixed | | 4,400,000 | |
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1. Prepare the current-year income statement for the company using variable costing.
2. Prepare the current-year income statement for the company using absorption costing.
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