Peapod Company, a Manufacturer of Slippers, Began Operations on May

question 35

Essay

Peapod Company, a manufacturer of slippers, began operations on May 1 of the current year.During this time, the company produced 200,000 units and sold 180,000 units at a sales price of $36 per unit.Cost information for this period is shown in the following table:
$\begin{array}{l}\text { Production costs }\\\begin{array}{ll}\text { Direct materials } & \$ 4.00 \text { per unit } \\\text { Direct labor } & \$ 5.75 \text { per unit } \\\text { Variable overhead } & \$ 286,000 \text { in tota. } \\\text { Fixed overhead } & \$ 420,000 \text { in tota. } \\\text { Non-production costs } & \\\text { Variable selling and administrative } & \$ 8,000 \text { in total } \\\text { Fixed selling and administrative } & \$ 30,000 \text { in total }\end{array}\end{array}$ a.Prepare Peapod's December 31 income statement for the current year under absorption costing.
b.Prepare Peapod's December 31 income statement for the current year under variable costing.

---

Definitions:

Forecast Equation

A Forecast Equation is an algorithm or model used in statistics and econometrics to predict future values based on past and present information.

Regression Model

A statistical model that examines the relationship between a dependent variable and one or more independent variables.

Indicator Variables

Variables used in statistical models to represent categorical data by assigning a numerical value, typically 0 or 1, to each category.

Regression Equation

An equation that describes the relationship between a dependent variable and one or more independent variables.