[misgm11]

I am really lost here, any help would be great.

Problem:
Production: 25,000 units
Sales (25,000 units) $2,500,000
Cost of goods sold
Starting inventory (10,000 units) $650,000
Production costs 1,625,000
Total $2,275,000
Ending inventory 650,000
Gross profit 1,625,000
Selling and general expenses 500,000
Net income $375,000

Production capacity is 50,000 units with a fixed overhead of $500,000. Variable cost is $45 per unit. Sales forcasted for second qtr is 25,000 units. Production for second qtr is scheduled to be 50,000 units.

Task is to convert the absorption income statement to a contribution margin income statement for the first quarter and prepare the same (absorption and contribution margin) for the second quarter. Also to compute production costs per unit for both approaches. I did the math and come up with a net income of 375,000 (absorption) and 875,000 contribution margin) for both quarters even though the production has changed, this does not seem right to me. I feel like I am missing some step but I have no idea what.

This is all the information I have to work this problem.