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New Member
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Oct 11, 2008, 12:45 PM
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Income statements under absorption costing and variable costing
One the absorption income statement I worked backwards from the income of operations which my book provided to help with the problem. What I do not understand is how to get the number for cost of goods sold. I do not know what to put together to get this number.
I have done the absorption income statement. Here is what I go for it:
Sales $2,160,000
Cost of goods sold $1,478,400
Gross profit $681,600
Selling and admin. Expenses $400,000
income from operations $281,600
On the Variable income statement I do not understand how to get the number for the variable cost of goods sold. I can not figure out which numbers go together to get the answer.
The Problem:
Dillon Sounds Inc. assembles and sells CD players. The company began operations on May 1, 2008, and operated at 100% of capacity during the first month. The following data susmeraize the results for May:
Sales (12,000) $2,160,000
Production costs (14,000):
Direct materials $896,000
Direct Labor $448,000
Variable Factory Overhead $235,200
Fixed factory overhead $145,600 $1,724,800
Selling and Adminsitrative expenses:
Variable selling and admin expenses $300,000
Fixed selling and admin expenses $100,000 $400,000
1. Prepare an income statement according to the absorption costing concept
2. Prepare an income statement according to the variable costing concept
Thank you for any help!
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New Member
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Oct 3, 2009, 10:34 AM
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on April 39, the end of the first month of operations, Country Manor Furniture Company prepared the following income statement, based on the variable costing concept:
sales (9,000 units) 1,080,000
Variable cost of goods sold:
Variable cost of goods manufactured 540,000
Less inventory, April 30 (1800 units) 90,000
Variable cost of goods sold 450,000
Manufactured margin 630,000
Variable selling and administrative expenses 245,000
Contribution margin 385,000
Fixed costs:
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Senior Member
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Oct 4, 2009, 07:27 AM
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For calculating variable cost of goods sold, you need to take into account:
Sales 2160000
Direct Materials 896000
Direct labor 448000
variable factory overheads 235200
Total variable costs (14000) 1579200
Ending inventory (2000)225600
Variable cost of goods sold 1353600
Add: Variable selling & admin 300000
Total 1653600
Contribution
Fixed costs
Manufacturing 145600
Selling & admin 100000
Net Income 260800
Difference between the net income under absorption and marginal costing is the element of fixed manufacturing expenses in the ending inventory.
145600/14000 x 2000 = 20800
Absorption profit 281,600
Marginal profit... 260,800
Difference... 20,800
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New Member
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Aug 12, 2012, 08:04 AM
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Roberts Corp. which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 35,000 units at $18 per unit
Production costs:
Variable: $4 per unit
Fixed: $303,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $33,900
6.
You did NOT receive full credit for this question in previous attempt.
The gross margin that the company would disclose on an absorption-costing income statement is:
None of these.
$155,875.
$455,000.
$224,875.
$187,000.
previous attempt
7.
You did NOT receive full credit for this question in previous attempt.
The contribution margin that the company would disclose on a variable-costing income statement is:
$155,875.
None of these.
$224,875.
$187,000.
$455,000.
previous attempt
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