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Serial Problem Business Solutions P2, P3 Santana Rey expects sales of Business Solutions's line of computer workstation furniture to equal 300 workstations (at a sales price of $3,900 each) for 2018. The workstations' manufacturing costs include the following. Direct materials Direct labor Variable overhead Fixed overhead $ 720 per unit $ 320 per unit $ 60 per unit $24,000 per year The selling expenses related to these workstations follow. Variable selling expenses Fixed selling expenses $ 35 per unit $3,500 per year Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations Required: Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations Required: 1. Complete the following income statements using absorption costing. 320 Answer is not complete. Production volume Cost of goods sold: 300 workstations workstations Direct materials per unit 720 5 720 Direct labor per unit 320 320 Variable overhead per unit 60 60 Fixed overhead per unit 80 75 Cost of goods sold per unit $ $ 1,175 Number of workstations sold 300 300 Total cost of goods sold 354,000 $ 352,500 OOOO 1,180 BUSINESS SOLUTIONS Total cost of goods sold BUSINESS SOLUTIONS Absorption Costing Income Statements Production volume 300 320 Sales volume - 300 Workstations workstations workstations Sales $ 960,000 X Cost of goods sold (354,000) Gross margin 606,000 0 Selling general and administrative expenses Net income (loss) $ 606,000 $ 0 Under absorption costing, can the difference between production Yes volume and sales volume affect the reported net income (loss)? 0 2. Complete the following income statements using variable costing. & Answer is not complete. BUSINESS SOLUTIONS Variable Costing Income Statements 300 Production volume (units) workstations 300 Sales volume (units) workstations 320 workstations 300 workstations Sales Less: Variable costs Direct materials Direct labor Variable overhead Variable selling expenses 0 Contribution margin Less: Fixed expenses Fixed overhead costs Call AARRRR 0 0 0 Contribution margin Less: Fixed expenses Fixed overhead costs Fixed selling expenses Net income (loss) $ 0 $ 0 Under variable costing, can a company increase its net income by increasing production? No

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