Basketball Products has the following cost information available for 2013:
| Direct materials |
$5.00 per unit |
| Direct labor |
$4.00 per unit |
| Variable manufacturing overhead |
$3.00 per unit |
| Variable selling and administrative costs |
$2.00 per unit |
| Fixed manufacturing overhead |
$21,000 |
| Fixed selling and administrative costs |
$5,000 |
During 2013, Basketball produced 2,000 units out of which 1,500 units were sold for $50 each.
Required:
A. Present a contribution format income statement using variable costing.
B. Present a multi-step income statement assuming the company uses absorption costing.
C. Why is net income under these methods different?