Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

Exercise 34

Income Statements, Variable and Absorption Costing
The following information pertains to Vladamir, Inc., for last year:

There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next.
Required:
1. How many units are in ending inventory?
2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income.
3. Assume the selling price per unit is $29. Prepare an income statement using (a) variable costing and (b) absorption costing.