Wrap-It Company, a Manufacturer of Wrapping Paper, Began Operations on June

Essay

Wrap-It Company, a manufacturer of wrapping paper, began operations on June 1 of the current year. During this time, the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit. Cost information for this period is shown in the following table:
$$\begin{array} { | l | l | } \hline \text { Production costs } & \\\hline \text { Direct materials } & \$ 2.00 \text { per unit } \\\hline \text { Direct labor } & \$ 80 \text { per unit } \\\hline \text { Variable overhead } & \$ 814,000 \text { in total } \\\hline \text { Fixed overhead } & \$ 481,000 \text { in total } \\\hline \text { Non production costs } & \\\hline \text { Variable selling and administrative } & \$ 78,000 \text { in total } \\\hline \text { Fixed selling and administrative } & \$ 210,000 \text { in total } \\\hline\end{array}$$ a. Prepare Wrap-It's December 31st income statement for the current year under absorption costing.
b. Prepare Wrap-It's December 31st income statement for the current year under variable costing.