The Following Information Is Available for the Crossover Company

Essay

The following information is available for the Crossover Company:
Sales: 25,000 units per year at $45 per unit
Production: 30,000 units in 2019 and 20,000 units in 2020
At the beginning of 2019 there was no inventory
Variable manufacturing costs are $30.00 per unit
Fixed manufacturing costs are $150,000 per year
Marketing costs are all fixed at $75,000 per year
Required:
(a) Prepare a gross margin income statement under absorption costing for 2019 and 2020. Include a column for each year and a total column.
(b) Prepare a contribution margin income statement under variable costing for 2019 and 2020. Include a column for each year and a total column.
(c) Comment on the results and reconcile any differences in income.