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 (28,800 x $101)	$2,908,800
Manufacturing costs (28,800 units):
Direct materials	1,751,040
Direct labor	414,720
Variable factory overhead	192,960
Fixed factory overhead	230,400
Fixed selling and administrative expenses	62,700
Variable selling and administrative expenses	75,800

The company is evaluating a proposal to manufacture 32,000 units instead of 28,800 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 cost, or total selling and administrative expenses.

a. 1. Prepare an estimated income statement, comparing operating results if 28,800 and 32,000 units are manufactured in the absorption costing 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
	28,800 Units Manufactured	32,000 Units Manufactured
Sales	$fill in the blank 894416fc5049fbd_2	$fill in the blank 894416fc5049fbd_3
Cost of goods sold:
Cost of goods manufactured	$fill in the blank 894416fc5049fbd_5	$fill in the blank 894416fc5049fbd_6
Inventory, October 31	fill in the blank 894416fc5049fbd_8	fill in the blank 894416fc5049fbd_9
Total cost of goods sold	$fill in the blank 894416fc5049fbd_11	$fill in the blank 894416fc5049fbd_12
Gross profit	$fill in the blank 894416fc5049fbd_14	$fill in the blank 894416fc5049fbd_15
Selling and administrative expenses	fill in the blank 894416fc5049fbd_17	fill in the blank 894416fc5049fbd_18
Operating income	$fill in the blank 894416fc5049fbd_20	$fill in the blank 894416fc5049fbd_21

a. 2. Prepare an estimated income statement, comparing operating results if 28,800 and 32,000 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.

Marshall Inc.
Variable Costing Income Statement
For the Month Ending October 31
	28,800 Units Manufactured	32,000 Units Manufactured
Sales	$fill in the blank d7d4f2079feefb7_2	$fill in the blank d7d4f2079feefb7_3
Variable cost of goods sold:
Variable cost of goods manufactured	$fill in the blank d7d4f2079feefb7_5	$fill in the blank d7d4f2079feefb7_6
Inventory, October 31	fill in the blank d7d4f2079feefb7_8	fill in the blank d7d4f2079feefb7_9
Total variable cost of goods sold	$fill in the blank d7d4f2079feefb7_11	$fill in the blank d7d4f2079feefb7_12
Manufacturing margin	$fill in the blank d7d4f2079feefb7_14	$fill in the blank d7d4f2079feefb7_15
Variable selling and administrative expenses	fill in the blank d7d4f2079feefb7_17	fill in the blank d7d4f2079feefb7_18
Contribution margin	$fill in the blank d7d4f2079feefb7_20	$fill in the blank d7d4f2079feefb7_21
Fixed costs:
Fixed factory overhead	$fill in the blank d7d4f2079feefb7_23	$fill in the blank d7d4f2079feefb7_24
Fixed selling and administrative expenses	fill in the blank d7d4f2079feefb7_26	fill in the blank d7d4f2079feefb7_27
Total fixed costs	$fill in the blank d7d4f2079feefb7_28	$fill in the blank d7d4f2079feefb7_29
Operating income	$fill in the blank d7d4f2079feefb7_31	$fill in the blank d7d4f2079feefb7_32