Biology Forums - Study Force

Bruster Company sells its products for $66 each. The current production level is 25,000 units, although
only 20,000 units are anticipated to be sold.

Unit manufacturing costs are:
   Direct materials      $12.00
   Direct manufacturing labour   $18.00
   Variable manufacturing costs   $9.00
   Total fixed manufacturing costs   $180,000
   Marketing expenses $6.00 per unit, plus    $60,000 per year

Required:
a.   Prepare an income statement using absorption costing in the gross margin format.
b.   Prepare an income statement using variable costing in the contribution margin format.

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