B B D E F G H 1 K L Problem 2 Walsh Company manufactures 30,000 units during July. There were no units in inventory on July 1. Informatin on costs and expenses for July is as follows: Total $ Number of units Unit $ 660,000 300,000 960,000 30,000 30,000 221 101 Manufacturing costs Variable Fixed Total manufacturing costs Selling and Administrative expenses Variable Fixed Total selling and administrative expenses 25,000 8 200,000 160,000 360,000 Required: If the company sells 25,000 units at $75 (units manufactured exceeds units sold), prepare an income statement for July using: A. Absorption Costing Siddique, Salina: B. Varibale Costing COGS = BI + COGM - EI In this example, BI = 0 as there is no inventory on July 1. Solution: A. Absorption Costing Income Statement $ Sales 1,875,000 Costs of Goods Sold Costs of Goods Manufactured ($(22+10) x 30,000] 960,000 Less Ending Inventory ($(22+10) x 5,000] 160,000 Siddique, Salina: Ending inventory units = BI + Units Produced - Units sold Total Costs of Goods Sold 800.000 = 0 + 30,000 - 25,000 = 5,000 units Gross Profit 1,075,000 less Selling and Administrative expenses (200,000 + 160,000) 360.000 Income from Operation 715.000 $ 1,875,000 660,000 110.000 5 B. 6 Variable Costing Income Statement 7 Sales (25,000 x $75) 8 Variable Costs of Goods Sold -9 Variable Manufacturing costs (30,000 x $22) -O less Ending Inventory (5,000 x $22) 1 Total Variable COGS -2 Manufacturing Margin 3 Less Variable Selling and Administrative Expenses -4 Contribution margin -5 Less Fixed costs -6 Fixed manufacturing costs 7 Fixed Selling and Administrative expenses -8 Total Fixed costs -9 Income from Operation 550.000 1,325,000 200.000 1,125,000 300,000 160,000 460.000 665.000 GO