50) If managers report inventories of zero at the start and end of each accounting period, operating incomes under absorption costing and variable costing will be the same.
51) Bressler Company sells its products for $33 each. The current production level is 50,000 units, although only 40,000 units are anticipated to be sold.
Unit manufacturing costs are:
Direct materials $6.00
Direct manufacturing labor $9.00
Variable manufacturing costs $4.50
Total fixed manufacturing costs$180,000
Marketing expenses $3.00 per unit, plus $60,000 per year
Required:
a.Prepare an income statement using absorption costing.
b.Prepare an income statement using variable costing.
52) Ireland Corporation planned to be in operation for three years.
During the first year, 20×1, it had no sales but incurred $240,000 in variable manufacturing expenses and $80,000 in fixed manufacturing expenses.
?In 20×2, it sold half of the finished goods inventory from 20×1 for $200,000 but it had no manufacturing costs.
?In 20×3, it sold the remainder of the inventory for $240,000, had no manufacturing expenses and went out of business.
?Marketing and administrative expenses were fixed and totaled $40,000 each year.
Required:
a.Prepare an income statement for each year using absorption costing.
b.Prepare an income statement for each year using variable costing.
