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Baxtell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: $ Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense 34 21 5 8 278,000 113,000 During the year, the company produced 27,800 units and sold 22,600 units. The selling price of the company's product is $90 per unit. b. Prepare an income statement for the year. (Do not leave any empty spaces; input a 0 wherever it is required.) $2,034,000 Absorption Costing Income Statement Sales Cost of goods sold: Beginning inventory Add: Cost of goods manufactured 0 0 2,034,000 Less: Ending inventory Gross margin Selling and administrative expenses Operating income $2,034,000 b. Prepare an income statement for the year. (Do not leave any empty spaces; input a 0 wherever it is required.) $2,034,000 Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold: Variable selling expense Add: Variable manufacturing costs Selling and administrative expenses Less: Ending inventory Variable cost of goods sold 0 Variable selling expense Contribution margin Fixed expenses: Fixed manufacturing overhead 278,000 Fixed selling and administrative 113,000 Operating income 0 2,034,000 391,000 1,643,000

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