16. At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000....
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16. At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are estimated to be 4,000 units.
a. How much would absorption costing operating income differ between a plan to produce 8,000 units and a plan to produce 10,000 units?
b. How much would variable costing operating income differ between the two production plans?
17. On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:
Units
Production
50,000
Sales ($18 per unit)
(42,000)
Inventory, January 31
8,000
Manufacturing costs:
Variable
$575,000
Fixed
80,000
Total
$655,000
Selling and administrative expenses:
Variable
$ 35,000
Fixed
10,500
Total
$ 45,500
a.
Prepare an income statement using absorption costing.
b.
Prepare an income statement using variable costing.
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