Borunda Corporation Has Provided the Following Data for Its Two

question 269

Essay

Borunda Corporation has provided the following data for its two most recent years of operation:
Required:
a.Assume the company uses absorption costing.Prepare an income statement for each year.
b.Assume the company uses variable costing.Prepare an income statement for each year.
c.Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

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Definitions:

Total Variable Cost

The sum of those costs that rise as output increases. Examples of variable costs are wages paid to workers and payments for raw materials.

Output

The total amount of goods or services produced by a company, sector, or economy during a specific period.

Per-Unit Cost of Production

The average cost incurred in producing one unit of a good or service, including all variable and fixed costs.

Grade-Point Average

A numerical representation of a student's academic performance, averaged across all completed courses.