Presented below is information pertaining to the first and second quarters of 2001 operations of the Oak Company:
Additional information:
¢ There were no finished goods at January 1, 2001.
¢ Oak writes off any quarterly underapplied or overapplied overhead as an adjustment of Cost of Goods Sold.
¢ Oak’s income tax rate is 35 percent.
a. Prepare an absorption costing income statement for each quarter.
b. Prepare a variable costing income statement for each quarter.
c. Calculate each of the following for 2001, if 130,000 units were produced and sold:
1. Unit
2. ratio
3. Total
4. Net income
5. Degree of operating leverage
6. Annual break-even unit sales volume
7. Annual break-even dollar sales volume
8. Annual margin of safety as a percentage
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