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During the first month of operations ended May 31, 2016, Frost Point Fridge Company manufactured 48,000 mini refrigerators, of which 44,000 were sold. Operating data
During the first month of operations ended May 31, 2016, Frost Point Fridge Company manufactured 48,000 mini refrigerators, of which 44,000 were sold. Operating data for the month are summarized as follows:
1 | Sales |
| $8,800,000.00 |
2 | Manufacturing costs: |
|
|
3 | Direct materials | $3,360,000.00 |
|
4 | Direct labor | 1,344,000.00 |
|
5 | Variable manufacturing cost | 816,000.00 |
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6 | Fixed manufacturing cost | 528,000.00 | 6,048,000.00 |
7 | Selling and administrative expenses: |
|
|
8 | Variable | $528,000.00 |
|
9 | Fixed | 352,000.00 | 880,000.00 |
Required: | |||
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).
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