Variable and Absorption Costing-Service CompanyLawn 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 $175.The variable and fixed cost data are as follows:Direct labor$100.00OverheadVariable cost per unit$23.00Fixed cost$100,000Marketing, general and administrativeVariable cost (per service contract completed)$24.00Administrative expenses (fixed- per month)$42,000During 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.
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