VERONA MANUFACTURING COMPANY
Verona Company has started to produce a cutting equipment on January 1, 2021. During January and
February, the company produced 12,000 units in each month. At this production level, the unit costs were
as follows; Direct Material $250, Direct Labor $312.50, Variable MOH $62.50, Fixed MOH $125. Variable
marketing expenses for January was $87,500, fixed marketing expenses per month was $375,000. Variable
general administrative expenses for January was $50,000, fixed general administrative expenses per month
was $625,000. There was no WIP inventory for both months. During January, 10,000 units and during
February 13,000 units were sold. Unit selling price was $1,100.
Question) Prepare the Income Statements for both months under Absorption and Variable Costing