題組內容

(3) MILKBOTTLE bought a 2,000-acre island for $10,000,000 and divided it into 200 equal size lots. As the lots are sold, they are cleared at an average cost of $5,000. Storm drains and driveways are installed at an average cost of $8,000 per site. Sales commissions are 10% of selling price. Administrative costs are $850,000 per year. The average selling price was $160,000 per lot during 2025 when 50 lots were sold. During 2026, the company bought another 2,000-acre island and developed it exactly the same way. Lot sales in 2026 totaled 300 with an average selling price of $160,000. All costs were the same as in 2025.
Required:
Determine operating income for both years using both absorption costing and variable costing.