Profit Centers: Comparison of Variable and Full Costing Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in 2009. These data summarize the 2009 and 2010 operations:
|
2009
|
2010
|
|
Sales
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1,800 units
|
2,200 units
|
|
Production:
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2,000 units
|
2,000 units
|
|
Production cost
|
|
|
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Factory-variable (per unit)
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$0.60
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$0.60
|
|
-fixed
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$1,000
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$1,000
|
|
Marketing-variable
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$.40
|
$.40
|
|
Administrative-fixed
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$500
|
$500
|
Required: Prepare the following, using a spreadsheet.
1. An income statement for each year based on full costing.
2. An income statement for each year based on variable costing.
3. A reconciliation and explanation of the differences in the operating income resulting from using the full- costing method and variable-costing method.