BE 6-1 Variable Costing

Markey Co. has the following information for March.

Sales $925,000

Variable cost of goods sold 465.000

Fixed manufacturing costs 85,000

Variable selling and administrative expenses 218,100

Fixed selling and administrative expenses 65,500

Determine:

(A) Manufacturing margin

(B) Contribution margin

(C) Income from operations for Markey Co. for the month of March

BE 6-4 Analyzing income under absorption and variable costing.

Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $367,500. Net sales are estimated to be 15,000 units.

A. How much would absorption costing income from operations differ between a plan to produce 15,000 units and a plan to produce 20,000 units? B. How much would variable costing income from operations differ between the two production plans?

PR 6-1B Absorption and variable costing income statements

During the first month of operations ended July 31, YoSan In. manufactured 3,500 flat panel televisions, of which 2,750 were sold. Operating data for the month are summarized as follows:

Sales................................................................................. $2,472,500

Manufacturing costs: Direct material ......................... ................. 989,000

Direct labor .................... ................. 483,000

Variable manufacturing costs ..................... ................. 179,400

Fixed manufacturing costs.......................... ................. 326,100 1,977,500

Selling and Adm. Expenses:

Variable...................................................... ................. $234,600

Fixed .................. ................. 110,400 345,000.

Instructions:

1. income statement based on the absorption costing concept.

2. 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)