Acc505 Managerial Accounting: (TCO E) The following absorption costing income statement

Acc505 Managerial Accounting

(TCO E) The following absorption costing income statement and additional data are available from the accounting records of Bernon Co. for the month ended May 31, 2007. During the accounting period, 17,000 units were manufactured and sold at a price of $60 per unit. There were no beginning inventories.
Bernon Co.
Absorption Costing Income Statement
for the Month Ended May 31, 2007
Sales (17,000 @ $60) 1,020,000
Cost of goods sold 612,000
Gross profit 408,000
Selling and administrative expenses 66,000
Income from operations 342,000
Additional Information:
Manufacturing costs: Total Cost Number of Units Unit Cost
Variable 442,000 17,000 26
Fixed 170,000 17,000 10
Total 612,000 36
Selling and administrative expenses:
Variable ($2 per unit sold) 34,000
Fixed 32,000
Total 66,000

Required: Prepare a new income statement for the year using variable costing. Comment on the differences, if any, between the absorption costing and the variable costing income statements.
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