Tableau DA 6-3: Mini-Case, Income reporting under absorption and variable costing LO P1, P2 Waltman Company just ended its first year of operations. We are hired to help with the company's reporting. The Tableau Dashboard provides data for our analysis.

 Tableau DA 6-3: Mini-Case, Income reporting under absorption and variable costing LO P1, P2

Waltman Company just ended its first year of operations. We are hired to help with the company's reporting. The Tableau Dashboard provides data for our analysis.

Here

Direct material 7 per unit  

Direct Labor 9 per unit  

Variable Overhead 4 per unit 

Fixed Overhead Costs $100,000 Per Year

Fixed Selling & Administrative Costs 45,000 Per Year

Variable Selling & Administrative Costs 85,000 Per Year

Units Produced 100,000 units

Units Sold 7,500 units

1. Prepare an income statement for the year using variable costing.

2. Prepare an income statement for the year using absorption costing.

3. Assuming the manager’s bonus is based on income, which costing method would the manager prefer in the current year?
4. Assuming the manager’s bonus is based on minimizing the cost of ending inventory, which costing method would the manager prefer in the current year?

 

Thanks