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During the first month of operations ended July 31, YoSan Inc. manufactured 9,300 flat panel televisions, of which 8,600 were sold. Operating data for the

During the first month of operations ended July 31, YoSan Inc. manufactured 9,300 flat panel televisions, of which 8,600 were sold. Operating data for the month are summarized as follows:

Sales $1,419,000
Manufacturing costs:
Direct materials $725,400
Direct labor 213,900
Variable manufacturing cost 186,000
Fixed manufacturing cost 93,000 1,218,300
Selling and administrative expenses:
Variable $111,800
Fixed 51,400 163,200

Required:

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

Sales
Cost of goods sold:
Cost of goods manufactured
Inventory, July 32

Total cost of goods sold

Gross profit
Selling and administrative expenses

Income from operations

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

Variable cost of goods sold:
Variable cost of goods manufactured
Inventory 31 July

Total variable cost of good sold

Manufacturing margin
Variable selling and administrative expenses

Contribution Margin
Fixed costs:
Fixed manufacturing costs
Fixed selling administrative expenses

Total fixed costs

Income or Loss

3. The income from operations reported under

absorption/variable

costing exceeds the income from operations reported under

absorption/variable

costing by the difference between the two, due to

fixed/variable

manufacturing costs that are deferred to a future month under

absorption/variable

costing.

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