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Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $25. The variable costs of production for one case of cans are as follows: Direct material Direct labor Variable manufacturing overhead Total variable manufacturing cost per case Variable selling and administrative costs amount to $0.70 per case. Budgeted fixed manufacturing overhead is $304,000 per year, and fixed selling and administrative cost is $38,500 per year. The following data pertain to the company's first three years of operation. Planned production (in units) Finished-goods inventory (in units), January 1 Actual production (in units) Sales (in units) Finished-goods inventory (in units), December 31 Actual costs were the same as the budgeted costs. $ 7.00 2.50 7.00 $16.50 Year 11 Year 2 76,000 76,000 0 0 76,000 55,000 21,000 76,000 76,000 0 Year 3 76,000 21,000 76,000 86,500 10,500

a. What will be the difference between absorption-costing income and variable-costing income in year 4? b. What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing? Complete this question by entering your answers in the tabs below. Reg 1A Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. Year Req 18 1 2 3 Reg 2 Change in inventory (in units) Req 3A Predetermined fixed overhead rate Req 38 Difference in fixed overhead expensed under absorption and variable costing < Req 1B Req 3A >

Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Req 3A Req 38 Prepare operating income statements for Chataqua Can Company for its first three years of operations using absorption costing. Sales revenue Less: Cost of goods sold Gross margin Selling and Administrative Expenses Fixed selling and administrative Req 2 Operating income Year 1 $1,900,000 $ 1,558,000 342,000 $ $ $ 91,700 250,300 $ Rog TA Year 2 1,375,000 1,127.500 247,500 $ 77,000 Year 3 $2,162,500 1,773,250 389,250 170,500 $ Prev 99,050 290,200 Req 18 > 4 of 5 ⠀⠀ Next >

Complete this question by entering your answers in the tabs below. Req 1A Reg 18 Req 2 Prepare operating income statements for Chataqua Can Company for its first three years of operations using variable costing. Year 1 Year 2 Year 3 Variable expenses: ReQ 3A Fixed expenses: $ $ Reg 38 < Req 1A 0 $ 0$ < Prev 0$ 0$ Req 2 > 4 of 5 0 0 Next > rigan- 4-530x rigan 6-4x