Answer Happy

Variable and Absorption Costing
Summarized data for 2016 (the first year of operations) for Trenton
Products, Inc., are as follows:
a. Prepare an income statement based on full absorption
costing.
Only use a negative sign with your answer for net income (loss), if
the answer represents a net loss. Otherwise, do not use negative
signs with any answers. Round answers to the nearest whole number,
when applicable.
b. Prepare an income statement based on variable costing.
Only use a negative sign with your answer for net income (loss), if
the answer represents a net loss. Otherwise, do not use negative
signs with any answers. Round answers to the nearest whole number,
when applicable.
c. Assume that you must decide quickly whether to accept a
special one-time order for 1,000 units for $14 per
unit.
Which income statement presents the most relevant
data? Answerabsorption costingvariable costing
Determine the apparent profit or loss on the special order based
solely on these data.
Use a negative sign with your answer if the special order creates
an apparent loss. Round answer to the nearest whole number.
$Answer
d. If the ending inventory is destroyed by fire, which costing
approach would you use as a basis for filing an insurance claim for
the fire loss? Why?
Select the most appropriate statement.
Absorption costing approach because the cost should include a
reasonable portion of fixed manufacturing costs.
Variable costing approach because the cost should include a
reasonable portion of fixed manufacturing costs.