Question
he following data were adapted from a recent income statement of Procter & Gamble Company: 1 (in millions) 2 Sales $84,167.00 3 Operating costs: 4
he following data were adapted from a recent income statement of Procter & Gamble Company:
1 |
| (in millions) |
2 | Sales | $84,167.00 |
3 | Operating costs: |
|
4 | Cost of products sold | $42,428.00 |
5 | Marketing, administrative, and other expenses | 30,337.00 |
6 | Total operating costs | $72,765.00 |
7 | Income from operations | $11,402.00 |
Assume that the variable amount of each category of operating costs is as follows:
1 |
| (in millions) |
2 | Cost of products sold | $23,760.00 |
3 | Marketing, administrative, and other expenses | 12,135.00 |
Required:
A. | Based on the data given, prepare a variable costing income statement for Procter & Gamble Company, assuming that the company maintained constant inventory levels during the period. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign. |
B. | If Procter & Gamble reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing? |
Labels | |
Fixed costs | |
Amount Descriptions | |
Contribution margin | |
Contribution margin ratio | |
Fixed manufacturing costs | |
Fixed marketing, administrative, and other expenses | |
Income from operations | |
Loss from operations | |
Manufacturing margin | |
Planned contribution margin | |
Sales | |
Sales mix | |
Variable cost of products sold | |
Variable marketing, administrative, and other expenses |
A. Based on the data given, prepare a variable costing income statement for Procter & Gamble Company, assuming that the company maintained constant inventory levels during the period. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.
Procter & Gamble Company |
Variable Costing Income Statement (assumed) |
(in millions) |
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
6 |
|
|
|
7 |
|
|
|
8 |
|
|
|
9 |
|
|
|
B. If Procter & Gamble reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing?
Income from operations would be lower.
Income from operations would be the same.
Income from operations would be higher.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started