Homework Handout Problem 6-2
Boise Manufacturing Company makes wooden pallets that are sold to
trucking companies. Following are inventory, sales and production figures for
PRICE PER UNIT
GENERAL & ADMIN COSTS/MONTH
1. Compute and income statement using the absorption
2. Compute an income statement using the variable method.
3. Reconcile and explain the differences.
4. Which method complies with GAAP and why?
5. Why might management convert
the internal reporting to a variable statement at the end of the period?