Peapod Company,a Manufacturer of Slippers,began Operations on May 1 of the Current

Essay

Peapod Company,a manufacturer of slippers,began operations on May 1 of the current year.During this time,the company produced 200,000 units and sold 180,000 units at a sales price of $36 per unit.Cost information for this period is shown in the following table:
$\begin{array}{ll}\text {Production costs}\\\text { Direct materials } & \$ 4.00 \text { per unit } \\\text { Direct labor } & \$ 5.75 \text { per unit } \\\text { Variable overhead } & \$ 286,000 \text { in total } \\\text { Fixed overhead } & \$ 420,000 \text { in total }\\\text { Non-production costs}\\\text { Variable selling and administrative}& \$ 8,000\text { in total}\\\text { Fixed selling and administrative }&\$ 30,000\text { in total}\end{array}$
a.Prepare Peapod's December 31 income statement for the current year under absorption costing.
b.Prepare Peapod's December 31 income statement for the current year under variable costing.