Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31, Marshall Inc, estimated the following operating results Sales (26.400 x $93) $2.455.200 Manufacturing costs (26.400 units): Direct materials 1.483,680 Direct labor 351.120 Variable factory overhead 163.600 Fixed factory overhead 195,360 Fond selling and administrative expenses 53.100 Variable selling and administrative expenses 64,300 The company is evaluating proposal to manufacture 29,600 units instead of 26,400 units, thus creating an ending inventory of 3.200 units Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead costs or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 26.400 and 29.600 unts are manufactured in the absorption couting format. If an amount box does not require an entry leave it blank. Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 26,400 Units Manufactured 29,600 Units Manufactured $2.455.200 $ 2455.100 Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 26,400 Units Manufactured 29,600 Units Manufactured 2455.00 $ 2.455.300 Sales Cost of goods sold 2. Prepare an estimated income statement, comparing operating results if 26.250 and 29.600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it Bank Marshall Inc. Variable Cesting Income Statement For the Month Ending October 31 Cab 2. 2. pare med en comparing operating Sorted the variar does not repren y me and Marshall Inc. Varie Casting in Matemat Toth Harth Ending October 31 26,400 Units Manufactured 29,600 Units Manufactured Variaticoded 1Q QOQQON QON 26,40 Units Manufactured 20,000 in Manufactured Variable cost of goods sold DODO DDODDO OD 10 DOQQOL QODO b. What is the reason for the difference is operating income reported for the two levels of production by the absorption conting income statement? The increase income from operations under absorption costing is caused by the location of overhead cost over a of goods The difference can also be explained by the amount of overhead cost included in the number of units. Thus, the cost Inventory Previous Next