1. (TCO C) Silver City, Inc., has collected the following operating information below for its current months activity. Using this information, prepare a flexible budget analysis to determine how well Silver City performed in terms of cost control.Actual Costs IncurredStatic Budget Activity level (in units)5,205178Variable Costs:Indirect materials$24,182$23,476Utilities$22,356$22,674Fixed Costs:Administration$63,450$65, 5002Rent$65,317$63,9042. (TCO E) Mesa Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below:Units in beginning inventory 2,000Units produced 9,000Units sold 10,000Sales$100,000Less cost of goods sold: Beginning inventory 12,000Add cost of goods manufactured 54,000Goods available for sale 66,000Less ending inventory 6,000Cost of goods sold 60,000Gross margin 40,000Less selling and admin. expenses 28,000Net operating income $12,000Variable manufacturing costs are $4 per unit.Fixed factory overhead totals $18,000 for the year.This overhead was applied at a rate of $2 per unit.Variable selling and administrative expenses were $1 per unit sold.Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.

1. (TCO C) Silver City, Inc., has collected the following operating information below for its current months activity. Using this information, prepare a flexible budget analysis to determine how well Silver City performed in terms of cost control.Actual Costs IncurredStatic Budget Activity level (in units)5,205178Variable Costs:Indirect materials$24,182$23,476Utilities$22,356$22,674Fixed Costs:Administration$63,450$65, 5002Rent$65,317$63,9042. (TCO E) Mesa Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below:Units in beginning inventory 2,000Units produced 9,000Units sold 10,000Sales$100,000Less cost of goods sold: Beginning inventory 12,000Add cost of goods manufactured 54,000Goods available for sale 66,000Less ending inventory 6,000Cost of goods sold 60,000Gross margin 40,000Less selling and admin. expenses 28,000Net operating income $12,000Variable manufacturing costs are $4 per unit.Fixed factory overhead totals $18,000 for the year.This overhead was applied at a rate of $2 per unit.Variable selling and administrative expenses were $1 per unit sold.Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.