Absorption and Variable Costing Comparisons: Sales Exceed Production Wright Development purchases, develops, and sells commercial building sites. As the sites are sold, they are cleared at an average cost of $8,000 per site. Storm drains and driveways are also installed at an average cost of $10,000 per site. Selling costs are 6% of sales price. Administrative costs are $600,000 per year. Two years ago, the company bought 2,000 acres of land for $7,500,000 and divided it into 200 sites of equal size. During that year, 95 sites were sold at an average price of $150,000. Last year, the company purchased and developed another 2,000 acres, divided into 200 sites. The purchase price was again $7,500,000. Sales totaled 250 sites last year at an average price of $150,000. Required a. Prepare functional income statements using absorption costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Functional (Absorption Costing) Income Statements Comparative (in thousands, except site data) Year 1 Sales $ Cost of sales Gross profit Selling and administrative expenses Net income doss) Year 2

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing …

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In compari…