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Problem 1. E6-61B Absorption and variable costing income statements (3 pts) The annual data that...

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Accounting

Problem 1. E6-61B Absorption and variable costing income statements (3 pts) The annual data that follow pertain to Aquatic Optics, a manufacturer of swimming goggles (the company has no beginning inventory): Sales price $ 47 Variable manufacturing expense per unit $ 16 Sales commission expense per unit $ 5 Fixed manufacturing overhead $2,000,000 Fixed operating expense $260,000 Number of goggles produced 200,000 Number of goggles sold 192,000 Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Aquatic Optics for the year. 2. Which statement shows the higher operating income? Why? 3. The companys marketing vice president believes a new sales promotion that costs $155,000 would increase sales to 200,000 goggles. Should the company go ahead with the promotion? Give your reason.

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