You Have the Following Information Regarding Crosby Company

Essay

You have the following information regarding Crosby Company:
Sales 25,000 units per year at $45 per unit
Production 30,000 units in 2007 and 20,000 units in 2008
At the beginning of 2007 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 an income statement under absorption costing for 2007 and 2008. Include a column for both years taken together.
(b) Prepare an income statement under variable costing for 2007 and 2008. Include a column for both years taken together.
(c) Comment on the results and reconcile any differences in income.