without preparing an income statement indicate what the difference will be between v 649691

INCOME STATEMENTS, VARIABLE AND ABSORPTION COSTING

The following information pertains to Caesar, Inc., for last year:

Beginning inventory, units	—
Units produced	60,000
Units sold	57,400
Variable costs per unit:
Direct materials	$9.00
Direct labor	$6.50
Variable overhead	$3.60
Variable selling expenses	$3.00
Fixed costs per year:
Fixed overhead	$234,000
Fixed selling and administrative expenses	$236,000

There are no work in process inventories. Normal activity is 60,000 units. Expected and actual overhead costs are the same.

Required:

1. How many units are in ending inventory?

2. Without preparing an income statement, indicate what the difference will be between variable costing income and absorption costing income.

3. Assume the selling price per unit is $32. Prepare an income statement using:

a. Variable costing

b. Absorption costing