BE 20-1 Variable costing

Marley company has the following information for March:

Sales $912,000

Variable cost of goods sold $474,000

Fixed manufacturing costs $82,000

Variable selling and administrative expenses $238,100

Fixed selling and administrative expenses $54,700

Determine

(A) the manufacturing margin

(B) the contribution margin

(C) income from operations for Marley Company for the month of March

BE 20-4 Analyzing income under absorption and variable costing

Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units.

A. How much would absorption costing income from operations differ between a plan to produce 10,000 units and a plan to produce 15,000 units?

B. How much would variable costing income from operations differ between the two produc-tion plans?

PR 20-1A Absorption and variable costing income statements

During the first month of operations ended August 31, Kodiak Fridgeration Company manu-factured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows:

Sales .................................................................. $10,800,000

Manufacturing costs:

Direct materials ...................................................... $6,400,000

Direct labor ......................................................... $1,600,000

Variable manufacturing cost ..................... $1,280,000

Fixed manufacturing cost ................................. $320,000 $9,600,000

Selling and administrative expenses:

Variable ............................................................. $1,080,000

Fixed ................................................................ $ 180,000 $1,260,000

Instructions

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

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

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