# Problem II. Loker Corp. makes and sells garden hoses in 50 ft. lengths. The following information is available for the year just ended, the company’s

Problem II.

Loker Corp. makes and sells garden hoses in 50 ft. lengths.  The following information is available for the year just ended, the company’s first year of operations:

 Units produced: 8,000 Variable costs per unit: Units sold: 6,000 Manufacturing (Direct Materials, Direct Labor, and Variable Overhead) – \$12.00 (total) Selling and Admin. – \$2.00 Selling price:\$25.00 per unit Total fixed costs: Overhead – \$7,200 Selling and Admin.- \$5,000

REQUIRED (You can use abbreviations if you wish.  Organize your answers in a readable way using the columns and rows below.):

1. Compute the cost of one unit of product using absorption costing.
2. Compute the cost of one unit of product using variable costing.
3. Prepare an income statement for the year in the proper format using absorption costing.
4. Prepare an income statement for the year in the proper format using variable costing.
5. Provide a quantitative explanation/reconciliation of why the two net income amounts that you calculated above are different (or the same).
 Unit Cost: Absorption Unit Cost: Variable Income Statement: Absorption Income Statement: Variable Reconciliation: