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	Units
Production	50,000
Sales ($18 per unit)	42,000
Inventory, January 31	8,000
Manufacturing costs:
Variable	$575,000
Fixed	80,000
Total	$655,000
Selling and administrative expenses:
Variable	$35,000
Fixed	10,500
Total	$ 45,500

	Required:
(a)	Prepare an income statement using absorption costing.*
(b)	Prepare an income statement using variable costing.*
	*Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less or Plus will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Labels
Fixed costs
For Month Ended January 31, 20--
Amount Descriptions
Contribution margin
Cost of goods manufactured
Cost of goods sold
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Income from operations
Inventory, January 31, 20--
Manufacturing margin
Sales
Selling and administrative expenses
Variable cost of goods manufactured
Variable cost of goods sold
Variable selling and administrative expenses repare an income statement using absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less or Plus will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign. Townsend Co. Absorption Costing Income Statement 1 2 Cost of goods sold: 3 4 5 6 7 8

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