Hasselback, Inc., produced 175,000 units and prepared the following income report using absorption costing (numbers in $1,000s):
Sales (100,000 Units) $15,000
Less Cost of Goods Sold
Direct Materials $1,200
Direct Labor 300
Unit-related overhead 900
Other overhead 4,000 6,400
Gross Margin 8,600
Less other operating costs
Variable Selling & Administrative 600
Fixed Selling & Administrative 2,000
1. Determine Hasselback’s profit using unit-variable costing.
2. Determine Hasselback’s profit using throughput costing.
3. Which method do you think presents the most reliable picture of current earnings? Why?