Question
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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