Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company...
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Accounting
Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations:
| Prior Year | Current Year | |||||
| Sales | 2,300 | units | 3,700 | units | ||
| Production | 3,000 | units | 3,000 | units | ||
| Production cost | ||||||
| Factoryvariable (per unit) | $ | 0.60 | $ | 0.60 | ||
| fixed | $ | 1,500 | $ | 1,500 | ||
| Marketingvariable | $ | 0.40 | $ | 0.40 | ||
| Administrativefixed | $ | 500 | $ | 500 | ||
Required:
1. Prepare an income statement for each year based on full costing.
2. Prepare an income statement for each year based on variable costing.
3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.
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