denominator Giant Jets is a French company that produces jet airplanes for
commercial cargo companies. The selling price (in euros) per jet is €1,000,000.
Currently the company uses actual volumes to allocate fixed production overhead to
units. However, Giant Jets’ accountant is considering the use of standard costs to
produce the absorption income statements. The company anticipates the following.
REQUIRED:
• A. Prepare income statements using the variable costing method.
• B. Prepare income statements using the throughput costing method.
• C. Prepare income statements using the absorption costing method. Allocate fixed
overhead using actual units produced in the denominator.
• D. In your own words, define normal capacity.
• E. Prepare an income statement using the absorption cost method and choose
a denominator level that represents normal capacity. Explain your choice for
normal capacity.
• F. Prepare a brief summary that reconciles the incomes among the four income
