Question - On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:
Units
Production 50,000
Sales ($18 per unit) 42,000
Inventory, January 31 8,000
Manufacturing costs:
Variable $575,000
Fixed 80,000
Total $655,000
Selling and administrative expenses:
Variable $ 35,000
Fixed 10,500
Total $ 45,500
(a) Prepare an income statement using absorption costing.
(b) Prepare an income statement using variable costing.