Question - Income statements under absorption costing and variable costing
Digital Edge Inc. assembles and sells MP3 players. The company began operations on May 1, 2010, and operated at 100% of capacity during the first month. The following data summarize the results for May:
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Sales (16,500 units)
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$2,475,000
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Production costs (21,000 units):
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Direct materials
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$1,165,500
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Direct labor
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558,600
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Variable factory overhead
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279,300
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Fixed factory overhead
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186,900
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2,190,300
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Selling and administrative expenses:
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Variable selling and administrative expenses
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$339,500
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Fixed selling and administrative expenses
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131,400
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470,900
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a. Prepare an income statement according to the absorption costing concept. Enter all amounts as positive numbers.
b. Prepare an income statement according to the variable costing concept. Enter all amounts as positive numbers.