Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 6,000 tons of plastic and sold 4,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 19% of the sales price of units produced, variable selling expenses were 8% of the selling price of units sold, fixed manufacturing costs were $4,380,000, and fixed administrative expenses were $540,000. Prepare income statements for each year using variable costing.
Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 6,000 tons of plastic and sold 4,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 19% of the sales price of units produced, variable selling expenses were 8% of the selling price of units sold, fixed manufacturing costs were $4,380,000, and fixed administrative expenses were $540,000. Prepare income statements for each year using variable costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 6,000 tons of plastic and sold 4,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 19% of the sales price of units produced, variable selling expenses were 8% of the selling price of units sold, fixed manufacturing costs were $4,380,000, and fixed administrative expenses were $540,000.
Prepare income statements for each year using variable costing.
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JACKSON COMPANY
Income Statement Variable Costing |
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JACKSON COMPANY
Income Statement Variable Costing |
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Prepare income statements for each year using absorption costing.
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JACKSON COMPANY
Income Statement Absorption Costing |
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$
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JACKSON COMPANY
Income Statement Absorption Costing |
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$
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$
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$
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Reconcile the differences each year in net income under the two costing approaches.
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2016
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2017
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$
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| Fixed manufacturing |
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| expensed with variable costing |
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| expensed with absorption costing | ||||
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| Absorption costing net income |
$
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$
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