During the first month of operations ended January 31, 2015, Hip and Conscious Clothing Company produced 55,500
Question:
During February, Hip and Conscious Clothing produced 47,400 designer cowboy hats and sold 51,450 cowboy hats. Operating data for February are summarized as follows:
Instructions
1. Using the absorption costing concept, prepare income statements for
(a) January
(b) February.
2. Using the variable costing concept, prepare income statements for
(a) January
(b) February.
3. a. Explain the reason for the differences in the amount of income from operations in (1) and (2) for January.
b. Explain the reason for the differences in the amount of income from operations in (1) and (2) for February.
4. Based on your answers to (1) and (2), did Hip and Conscious Clothing Company operate more profitably in January or in FebruaryExplain.
Step by Step Answer:
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac