Absorption Costing Income Statement On October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on the variable costing concept: Maryville Equipment Company Variable Costing Income Statement For the Month Ended October 31 Sales (14,400 units) $604,800 Variable cost of goods sold: $273,700 Variable cost of goods manufactured Inventory, October 31 (1,700 units) Total variable cost of goods sold (28,900) (244,800) $360,000 Manufacturing margin Variable selling and administrative expenses (158,400) Contribution margin $201,600 Fixed costs: Fixed manufacturing costs $48,300 Fixed selling and administrative expenses 43,200 Total fixed costs (91,500) Operating income $110,100 Prepare an income statement under absorption costing. Round all final answers to whole dollars. Maryville Equipment Company Absorption Costing Income Statement For the Month Ended October 31 Sales 604,800 Cost of goods sold: Cost of goods manufactured 322,000 Inventory, October 31 Total cost of goods sold Gross profit pudo Selling and administrative expenses Operating income The following data were adapted from a recent income statement of Ansara Company for the year ended December 31: (in millions) Sales $23,770 Cost of goods sold $(20,200) (2,140) Selling, administrative, and other expenses Total expenses $(22,340) Operating income $1,430 Assume that $5,180 million cost of goods sold and $1,180 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $2,820 Ending inventory $3,290 Also, assume that 40% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Ansara Company. Round numbers to nearest million. Ansara Company Variable Costing Income Statement (assumed) For the Year Ended December 31 Sales 23,770 Variable cost of goods sold: Beginning inventory Variable cost of goods manufactured 1,692 Ending inventory Total variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income Product Profitability Analysis Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products: Conquistador Hurricane Sales price $4,800 $3,000 Variable cost of goods sold (3,020) (2,010) Manufacturing margin $1,780 $990 Variable selling expenses (724) (390) Contribution margin $1,056 $600 Fixed expenses (500) (240) Operating income $556 $360 In addition, the following sales unit volume information for the period is as follows: , Conquistador Hurricane Sales unit volume 1,900 1,400 a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent. Galaxy Sports Inc. Contribution Margin by Product Conquistador Hurricane Sales Variable cost of goods sold Manufacturing margin lodpoj Variable selling expenses Contribution margin Contribution margin ratio % %
