The Following Information Is Available for the Crossover Company

question 139

Essay

The following information is available for the Crossover Company:
Sales: 25,000 units per year at $45 per unit
Production: 30,000 units in 2019 and 20,000 units in 2020
At the beginning of 2019 there was no inventory
Variable manufacturing costs are $30.00 per unit
Fixed manufacturing costs are $150,000 per year
Marketing costs are all fixed at $75,000 per year
Required:
(a) Prepare a gross margin income statement under absorption costing for 2019 and 2020. Include a column for each year and a total column.
(b) Prepare a contribution margin income statement under variable costing for 2019 and 2020. Include a column for each year and a total column.
(c) Comment on the results and reconcile any differences in income.

---

Definitions:

Auditory Convergence

The integration of sound information from both ears at certain points in the auditory pathway, enhancing sound localization and processing.

Refractory Threshold

The refractory threshold is the period following an action potential during which a neuron is incapable of firing another action potential or the threshold is significantly increased.

Difference Threshold

The smallest detectable difference between two stimuli that a person can sense at least half the time.

Just Noticeable Difference

The smallest difference in stimulation that can be reliably detected by an organism.