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CBA is a division of Flynn, Inc. The division manufactures and sells a pump that...

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Question

Accounting

CBA is a division of Flynn, Inc. The division manufactures and sells a pump that is used in a wide variety of applications. During the coming year, it expects to sell 30,000 units for $25 per unit. Raad Ali, division manager, is considering producing either 30,000 or 40,000 units during the period. Other information is presented in the schedule below:

Division Information 2016

Beginning inventory 0
Expected sales in units 30,000
Selling price per unit $25
Variable manufacturing cost per unit $7
Fixed manufacturing overhead costs (total) $480,000
Fixed manufacturing overhead costs per unit ----
Based on 30,000 units ($480,000 30,000) $16
Based on 40,000 units ($480,000 40,000) $12
Manufacturing cost per unit -----
Based on 30,000 units ($7 variable + $16 fixed) $23
Based on 40,000 units ($7 variable + $12 fixed) $19
Selling and administrative expenses (all fixed) $25,000

Instructions

Prepare a variable costing income statement with one column showing the results if 30,000 units are produced and one column showing the results if 40,000 units are produced.

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