reconcile the differences in income for the two methods 641290

(Absorption and variable costing) Bird’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company’s annual fixed overhead cost is $750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $180,000. The following additional information is available:

	2010 Don't use plagiarized sources. Get Your Custom Essay on reconcile the differences in income for the two methods 641290 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Order Essay	2011
Selling price per unit	$ 500	$ 500
Number of units sold	10,000	12,000
Number of units produced	12,500	11,000
Beginning inventory (units)	7,500	10,000
Ending inventory (units)	10,000	?

Prepare pre tax income statements under absorption and variable costing for the years ended 2010 and 2011, with any volume variance being charged to Cost of Goods Sold. Reconcile the differences in income for the two methods.

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