The Following Data Are Available for Atkinson Company for the Year

question 95

Essay

The following data are available for Atkinson Company for the year ended December 31,2015:
$\begin{array}{ll}\text { Sales } & 38,000 \text { units } \\\text { Sales price } & \$ 50 \text { per unit } \\\text { Actual variable manufacturing costs } & \$ 1,400,000 \\\text { Actual fixed manufacturing costs } & \$ 228,000 \\\text { Actual variable nonmanufacturing costs } & \$ 76,000 \\\text { Actual fixed nonmanufacturing costs } & \$ 135,000 \\\text { Work-in-process inventory, January 1, 2015 } & 0 \\\text { Finished goods inventory, January 1, 2015 } & 0 \\\text { Direct materials inventory, January 1, 2015 } & 0 \\\text { Work-in-process inventory, December 31,2015 } & 0 \\\text { Direct materials inventory, December } 31,2015 & 0 \\\text { Expected production } & 40,000 \text { units } \\\text { Actual production } & 40,000 \text { units }\end{array}$
Required:
A) Using the variable-costing approach, prepare an income statement for the year ended December 31, 2015. Assume actual fixed costs were equal to budgeted fixed costs.
B) Using the absorption-costing approach, prepare an income statement for the year ended December 31, 2015. Assume actual fixed costs were equal to budgeted fixed costs.

• A) Using the variable-costing approach, prepare an income statement for the year ended December 31, 2015. Assume actual fixed costs were equal to budgeted fixed costs.
• B) Using the absorption-costing approach, prepare an income statement for the year ended December 31, 2015. Assume actual fixed costs were equal to budgeted fixed costs.

---

Definitions:

Hourly Wages

The amount of money paid to an employee for one hour of work.

Income Effect

Variations in the income levels of individuals or economies and the resultant effects on the demand for goods or services.

Substitution Effect

The economic understanding that as prices rise or incomes decrease consumers will replace more expensive items with less costly alternatives.

Hourly Wages

The amount of earnings paid to an employee for each hour worked.