Case 8-31: Lucknow Lighting Ltd. --Correct Answers w/ Solutions !!

Lucknow Lighting Ltd.. manufactures blackboard chalk for educational uses. The company's product is sold by the box at $50 per

unit.......... and SO ON...

Required: Lucknow Lighting Ltd. had no beginning or ending work-in-process inventories for either year.

1) Prepare operating income statements for both years based on absorption costing.

2) Prepare operating income statements for both year baed on variable costing.

3) Prepare a numerical reconciliation of the difference in income reported under the 2 costing methods used in

requirements 1) and 2)

Check figures: 

1. Operating income year 1: $ 27,500

2. Operating income year 2: $ 20,500