Question
I am having trouble with setting up this income statement based on absorption costs. Income Statements- Absorption Costing and Variable Costing Gallatin County Motors Inc.
I am having trouble with setting up this income statement based on absorption costs.
Income Statements- Absorption Costing and Variable Costing
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July:
Sales (9,000 units) | $900,000 | |||
Production costs (12,000 units): | ||||
Direct materials | $444,000 | |||
Direct labor | 213,600 | |||
Variable factory overhead | 106,800 | |||
Fixed factory overhead | 70,800 | 835,200 | ||
Selling and administrative expenses: | ||||
Variable selling and administrative expenses | $129,500 | |||
Fixed selling and administrative expenses | 50,100 | 179,600 |
Preparing an income statement according to the absorption costing concept.
Cost of goods sold,Direct laborDirect materials,Fixed factory overhead costs,Sales | $- Select - |
Cost of goods soldGross profitSalesSelling and administrative expensesVariable factory overhead | - Select - |
Direct laborDirect materialsGross profitFixed factory overhead costsSales | $- Select - |
Cost of goods soldFixed factory overhead costsSalesSelling and administrative expensesVariable factory overhead | - Select - |
Operating incomeLoss from operations | $- Select - |
b. Preparing an income statement according to the variable costing concept.
Contribution marginFixed selling and administrative expensesManufacturing marginSalesVariable selling and administrative expenses | $- Select - | |
Fixed factory overhead costsFixed selling and administrative expensesManufacturing marginVariable cost of goods soldVariable selling and administrative expenses | - Select - | |
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable selling and administrative expenses | $- Select - | |
Fixed factory overhead costsFixed selling and administrative expensesManufacturing marginVariable cost of goods soldVariable selling and administrative expenses | - Select - | |
Contribution marginFixed selling and administrative expensesManufacturing marginSalesVariable selling and administrative expenses | $- Select - | |
Fixed costs: | ||
Contribution marginFixed factory overhead costsManufacturing marginSalesVariable cost of goods sold | $- Select - | |
Fixed selling and administrative expensesManufacturing marginSalesVariable cost of goods soldVariable selling and administrative expenses | - Select - | |
Contribution marginOperating incomeManufacturing marginSalesTotal fixed costs | - Select - | |
Operating incomeLoss from operations | $- Select - |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started