I. Prepaw an estimated income statement in absocption costing form for October for solvent, assuming that production continues during the monith. Be sure to complote the statement heuding. Reter to the list of Labels and Amount Descriptions provided for the exact wording of the arswor choicos for text entries. A colon (i) will automatcaly appear if it is required. Enthr amounts as posilve numbers uniess the amount is a calaulation that risults in a negative amount. For examplo: Nef loss should be negative. Amount Descriptions Contribution margin Contribution margin ratio Direct labor Direct materials Fixed manufacturing cost Fixed selling and administrative expenses Gross profit Operating income Operating loss Manufacturing margin Planned contribution margin Sales Sales mix Total cost of goods sold Total fixed costs Total selling and administrative expenses Total variable cost of goods sold Variable manufacturing cost Variable selling and administrative expenses Sales for October are expected to drop about 40% below those of September. No significant changes are articipated in the foxed costs or variable costs per unit. No extra costs will be incurred in discontinuing operations in the portion of the plant asscciated wth solvent. The irventory of solvent at the beginning and end of October is not expected to be significant (materiah). Required: 1. Prepare an estimated income statement in absorption costing form for Octobor for solvont, assuming that production continues during the month. 2. Prepare an estimated income statement in variable costing form for October for solvent, assuming that production continues during the month * 3. What would be the estmated opevating loss it the solvent production were temporanily suspended for October? if a loss is incurred, enter that amount as a negabve number using a minus sign 4. What advice thould you give to management? "Be sure to complete the statement heading. Feler to the fist of Labels and Amount Doscriptions provided for the exact wording of the answer choicess for texd entries. A colan (Y) will automaticay appear if R is required. Enfer amounts as positive numbers unioss the amount is a calculation that results n a nepative amount. For example: Net loss should be negative. 2. Prepare an estimated hcome statement in variable costing form for October for solvent assuming that production continups during the month. Be sure to complete the statement heading. Apter to the kst of Labels and Amount Descriptions provided for the exact wording of the answer choices for fext entries. A colon ( 9 wil automatically appear if it is recuired. Enter amounts as positve numbers unless the amount is a calculation that results in a negative amount: For example: Net loss should be negatve The decrind for solvent, one of numerous products manulactured by Logan industries inc, has deopped shavply because of recent competition from a similat product. The compary's chemists are currently completing tests of various new formulas, and is is antioipated that the manufacture of a superior product can be started on November 1 , one month in the future: No changes wil be needed in the present production taciltes to manutacture, the new product because only the minture of the various materials will be changed: The controler has been asked by the president of the compamy for acvice on whether to continue production during Octobec or to suspend the manulacture of solvent unta Novembar 1. The following data have been assembled: The proguction costs and selling and administrative expenses, based on production of 10,000 units in Septomber, are as follows: Logan Industries Inc. Score: 113/116 Estimated Income Staternent-Variable Costing-Solvent For the Month Ending October 31 \begin{tabular}{|c|c|c|c|c|} \hline 1 & Sales & & & $480,000.00 \\ \hline 2 & Variable cost of goods sold: & & & \\ \hline 3 & Direct materials & & $210,000,00V & , \\ \hline 4 & Direct labor & & 144,000.00 & \\ \hline 5 & Variable manufacturing cost & & 48,000.00V & \\ \hline 6 & Total variable cost of goods sold & & & 402,000.00 \\ \hline 7 & Manufacturing margin & v & & $78,000.00 \\ \hline 8 & Variable selling and administrative expenses & & & 36,000.002 \\ \hline 9 & Contribution margin & & & $42,000.00 \\ \hline 10 & Fixed costs: & & & \\ \hline 11 & Fixed manufacturing cost & & $100,000.00V & \\ \hline 12 & Fixed selling and administrative expenses & & 40,000.00V & \\ \hline 13 & total fixed cost & & & 140,000,00 \\ \hline 14 & Operating loss & & & $98,000,00 \\ \hline \end{tabular} Labels Cost of goods sold Fixed costs For the Month Ending October 31 October 31 Selling and administrative expenses Variable cost of goods sold Logan Industries Inc. Score: 76/101 Estimated Income Statement-Absorption Costing - Solvent For the Month Ending October 31 1 Sales 8 Gross profit $(22,000.00)2 9 Variable selling and administrative expenses: 10 Fixed selling and administrative expenses 11 Operating loss $36,000.00 12 13 40,000.00V $(98,000.00)v76,000.00v