Absorption and Variable Costing Income Statements

During the first month of operations ended July $31,$ YoSan Inc. manufactured $9,500$ flat panel televisions, of which $8,900$ were sold. Operating data for the month are summarized as follows:

Sales $$1,246,000$

Manufacturing costs:

Direct materials $$627,000$

Direct labor $190,000$

Variable manufacturing cost $161,500$

Fixed manufacturing cost $76,0001,054,500$

Selling and administrative expenses:

Variable $$97,900$

Fixed $45,000142,900$

Required:

Question Content Area

$1.$ Prepare an income statement based on the absorption costing concept.

YoSan Inc.

Absorption Costing Income Statement

For the Month Ended July $31$

Sales

$Sales

$1,246,000$

Cost of goods sold:

$

$$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

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$2.$ Prepare an income statement based on the variable costing concept.

YoSan Inc.

Variable Costing Income Statement

For the Month Ended July $31$

$$-$ Select $-$

Variable cost of goods sold:

$$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

Fixed costs:

$$-$ Select $-$

$-$ Select $-$

blank

blank $-$ Select $-$

$$-$ Select $-$

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$3.$ Explain the reason for the difference in the amount of income from operations reported in $(1)$ and $(2).$

The income from operations reported under

costing exceeds the income from operations reported under

costing by the difference between the two, due to

manufacturing costs that are deferred to a future month under

costing.

Feedback AreaAbsorption and Variable Costing Income Statements

During the first month of operations ended July $31,$ YoSan Inc. manufactured $9,500$ flat panel televisions, of which $8,900$ were sold. Operating data for the month are summarized as follows:

Sales $$1,246,000$

Manufacturing costs:

Direct materials $$627,000$

Direct labor $190,000$

Variable manufacturing cost $161,500$

Fixed manufacturing cost $76,0001,054,500$

Selling and administrative expenses:

Variable $$97,900$

Fixed $45,000142,900$

Required:

Question Content Area

$1.$ Prepare an income statement based on the absorption costing concept.

YoSan Inc.

Absorption Costing Income Statement

For the Month Ended July $31$

Sales

$Sales

$1,246,000$

Cost of goods sold:

$

$$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

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Question Content Area

$2.$ Prepare an income statement based on the variable costing concept.

YoSan Inc.

Variable Costing Income Statement

For the Month Ended July $31$

$$-$ Select $-$

Variable cost of goods sold:

$$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

Fixed costs:

$$-$ Select $-$

$-$ Select $-$

blank

blank $-$ Select $-$

$$-$ Select $-$

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Question Content Area

$3.$ Explain the reason for the difference in the amount of income from operations reported in $(1)$ and $(2).$

The income from operations reported under

costing exceeds the income from operations reported under

costing by the difference between the two, due to

manufacturing costs that are deferred to a future month under

costing.

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