Variable Costing Income Statement; Reconciliation
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below:
The company's selling and administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit sold in variable expenses. The $16 per unit product cost given above is computed as follows:
Required:
- 1. Redo the company's income statement in the contribution format using variable costing.
- 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above