Question

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at...

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

Units
Production 50,000
Sales ($18 per unit) 42,000
Inventory, January 31 8,000
Manufacturing costs:
   Variable $575,000
   Fixed 80,000
     Total $655,000
Selling and administrative expenses:
   Variable $35,000
   Fixed 10,500
     Total $45,500

a. Prepare an income statement using absorption costing.

Townsend Co.
Absorption Costing Income Statement
For Month Ended January 31, 20--
Sales $
Cost of goods sold:
$
Cost of goods sold
Gross profit $
Less selling and administrative expenses
Income from operations $

b. Prepare an income statement using variable costing.

Townsend Co.
Variable Costing Income Statement
For Month Ended January 31, 20--
$
Variable cost of goods sold:
$
$
$
Fixed costs:
$
Income from operations $
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