Ireland Corporation Planned to Be in Operation for Three Years

question 180

Essay

Ireland Corporation planned to be in operation for three years.
-During the first year, 2017, it had no sales but incurred $240,000 in variable manufacturing expenses and $80,000 in fixed manufacturing expenses.
-In 2018, it sold half of the finished goods inventory from 2017 for $200,000 but it had no manufacturing costs.
-In 2019, it sold the remainder of the inventory for $240,000, had no manufacturing expenses and went out of business.
-Marketing and administrative expenses were fixed and totaled $40,000 each year.
Required:
a.Prepare an income statement for each year using absorption costing.
b.Prepare an income statement for each year using variable costing.

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Definitions:

Warm Currents

Movements of warmer water within oceans and seas, which can influence climate and weather patterns in coastal regions.

Canary Current

A cold ocean current flowing southward along the western coast of North Africa, part of the North Atlantic subtropical gyre.

Atmospheric Water

Water contained in the Earth's atmosphere in the form of vapor, clouds, and precipitation, crucial for the global water cycle.

Desert

A dry region with a mean annual precipitation of 25 cm or less; commonly applied to areas with sparse vegetation or the presence of desert-type plants and landscapes.