Answer:
Results are below.
Explanation:
<u>The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).</u>
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<u>First, we need to calculate the total unitary variable cost:</u>
Total unitary variable cost= 38 + 36 + 6 + 9
Total unitary variable cost= $89
<u>Now, the income statement:</u>
Sales= 8,400*120= 1,008,000
Total variable cost= 89*8,400= (747,600)
Total contribution margin= 260,400
Fixed manufacturing overhead= (151,300)
Fixed selling and administrative expense= (109,200)
Net operating income= (100)
The absorption costing method includes all costs related to production, both fixed and variable. <u>The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.</u><u> </u>
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<u>First, we need to calculate the unitary production cost:</u>
Unitary production cost= 38 + 36 + 6 + (151,300 / 8,900)
Unitary production cost= $95
<u>Now, the income statement:</u>
Sales= 1,008,000
COGS= 8,400*95= (798,000)
Gross profit= 210,000
Total selling and administrative expense= 109,200 + (8,400*9)= (184,800)
Net operating income= 25,200
