Posted: September 18th, 2017
Rods Prods manufactures cattle prods. The market has been declining in recent years and Rods has been forced to drop its price slightly although production costs have remained the same. Operating information for the last two years is given below: 2013 2014 Unit sales 50,000 48,000 Unit selling price .00 $14.00 # units produced [= budgeted] 50,000 80,000 Variable manufacturing cost .00/unit $10.00/unit Fixed manufacturing cost $175,000 $175,000 Budgeted and actual production was the same in both years, budgeted production and sales were the same in 2013, and in 2012, but not in 2014 when budgeted production rose to 80,000 units. Rod, the president of Rods Prods was delighted to see the income statement for 2014, which shows an increase over 2013. The income statements seen by Rod were prepared using absorption costing. Prepare the income statements for both years using absorption costing. Prepare the income statements for both years using variable costing. Explain the difference between the two costing methods and which method is a more accurate reflection of the financial situation of the company. Your assignment should be at least 2 pages and follow proper APA format. Show your work for any calculations and cite any outside references used.
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