Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $155. The variable and fixed cost data are as follows:

Direct labor $100.00
Overhead Variable cost per unit $7
Fixed cost (annual) $100,000

Marketing, general and administrative Variable cost (per service contract completed) $8
Administrative expenses (fixed- annual cost) $42,000

During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year.

Required:
a. Calculate reported income for management. Do not use negative signs with any answers.
b. Calculate reported income for the bank. Do not use negative signs with any answers.

variable costyng net income 238,000

under absorption                    239,000

Explanation:

Variable costing:

Sales revenue               1.472.500‬

variable expense          1.092.500‬

contribution margin        380,000

manufacturing fixed cost      100,000

adminsitrative fixed cost        42,000

net gain                           238,000

Absorption costing:

units cost:

100 + 7 + 100,000 / 10,000 = 117

Sales revenue               1.472.500‬

Cost of goods sold          1.111.500‬‬

Gross profit                     361,000

G&A expense (variable)    80,000

G&A fixed                           42,000

Net income                      239,000

i believe the answer is: streets and roads

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