b Prepare an income statement based on variable costing.
Only use a negative sign with your answer for net income loss if the answer represents a net loss. Otherwise, do
not use negative signs with any answers. Round answers to the nearest whole number, when applicable.
c Assume that you must decide quickly whether to accept a special onetime order for units for $ per unit.
Which income statement presents the most relevant data?
Determine the apparent profit or loss on the special order based solely on these data.
Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest
whole number.
$
d If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an
insurance claim for the fire loss? Why?
Select the most appropriate statement.
Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing
costs.
Variable costing approach because the cost should include a reasonable portion of fixed manufacturing costs.
