Question

AFN Company produces plastic that is used for injection-moulding applications such as gears for small motors. In 2020, the first year of operations, AFN Company produced 4,300 tonnes of plastic and sold 2,795 tonnes. In 2021, the production and sales results were exactly reversed. In each year, the selling price per tonne was $2,000; variable manufacturing costs were 14% of the sales price for the units produced; variable selling expenses were 10% of the selling price of the units sold; fixed manufacturing costs were $2,795,000; and fixed administrative expenses were $541,800. Collapse question part (a) Prepare comparative income statements for each year using variable costing. (Use the format from Illustration 8.5.) AFN COMPANY Income Statement—Variable Costing 2020 2021 Number of units manufactured Number of units sold $ $ : : : : $ $

Answer 1