Problem

Franklin Glass Company makes stained glass lamps. Each lamp that it sells for $315.50 per lamp requires $16.20 of direct materials and $71.20 of direct labor. Fixed overhead costs are expected to be $192,000 per year. Franklin Glass expects to sell 1,000 lamps during the coming year. Selling and administrative expenses were zero.

Required

a. Prepare income statements using absorption costing, assuming that Franklin Glass makes 1,000, 1,250, and 1,500 lamps during the year.

B. Prepare income statements using variable costing, assuming that Franklin Glass makes 1,000, 1,250, and 1,500 lamps during the year.