Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the rst month. The following data summarize the results for August: Sales {13,500 units) $1,890,000 Production costs (1?,000 units]: Direct materials $880,600 Direct labor 423,300 Variable factory overhead 210,800 Fixed factory overhead 141,100 1,655,800 Selling and administrative expenses: Variable selling and administrative expenses $256,600 Fixed selling and administrative expenses 99,300 355,900 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Cosling Income Statement For the Month Ended August 31 (:31: mm b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 I VI Fixed costs: ._\" D : i:J DiD UiDDiDD Inventory Valuation under Absorption Costing and Variable I:Zosting At the end of die rst year of operations. 5,800 units remained in the nished goods inventory. The unit manufacturing costs during \"die year were as follows: Direct materials $2330 Direct labor 13.40 Fixed factory overhead 4.80 Variable factory overhead 4.20 Determine the cost of the nished goods inventory reported on the balance sheet under (a) the absorption costing concept and [hi the variable costing concept. Variable costing E Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells highquality sporting goods equipment under its highly recognizable JSports logo. The company began operations on May 1 and operated at 100% of capacity (67,100 units) during the rst month, creating an ending inventory of 6,100 units. During June, the company produced 61,000 garments during the month but sold 67,100 units at $105 per unit. The June manufacturing costs and selling and administrative expenses were as follows: Number oi Unit Total Units Cost Cost Manufacturing costs in June 1 beginning inventory: Variable 5,100 $42.00 $255,200 Fixed 6,100 16.00 97,600 Total $58.00 $353,800 Manufacturing costs in June: Variable 51,000 $42.00 $2,552,000 Fixed 61,000 17.60 1,073,600 Total $59.60 $3,635,600 Selling and administrative expenses in June: Variable 52,100 20.50 $1,395,550 Fixed 67,100 7.00 469,700 Total 27.80 $1,865,380 \fb. Prepare an income statement according to the variable costing concept for June. Joplin Industries Inc. Variable Costing Income Statement For the Month Ended June 30 Fixed costs: C. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the income statement will have a lower income from operations.Cost of Goods Manufactured, using Variable Costing and Absorption Costing On December 31, the end of the rst year of operations, Frankenreiter Inc., manufactured 2,400 units and sold 2,100 units. The following income statement was prepared. based on the variable costing concept: Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 2011 Sales $441,000 Variable cost of goods sold: Variable cost of goods manufactured $242,400 Elnventorv, December 31 (30,300) Total variable cost of goods sold 212,100 Manufacturing margin $228,900 Total variable selling and administrative expenses 52,500 Contribution margin $176,400 Fixed costs: Fixed manufacturing costs $110,400 Fixed selling and administrative expenses 35,?00 Total xed costs 146,100 Income from operations $30,300 Determine the unit cost of goods manufactured, based on {a} the variable costing concept and (b) the absorption costing concept. I- For the Year tnue December 31, zuu Sales $441,000 Variable cost of goods sold: Variable cost of goods manufactured $242,400 EInventorv, December 31 (30,300) Total variable cost of goods sold 212,100 Manufacturing margin $220,900 Total variable selling and administrative expenses 52,500 Contribution margin $125,400 Fixed costs: ) Fixed manufacturing costs $110,400 Fixed selling and administrative expenses 35,200 Total xed costs 146,100 Income from operations $30,300 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept. $[:1 $[:1 Variable costing Absorption costing 1 \fAssume the xed manufacturing costs were $20,034 and the fixed selling and administrative expenses were $8,590. Prepare an income statement according to the variable costing concept. Round all nal answers to whole dollars. Weatherfnrd (Ioumpilmlr Variable Costing Income Statement For the Month Ended November 3|] ' $l:l Variable cost of goods sold: Fixed costs: Absorption Costing Income Statement On March 31, the end of the rst month of operations, Sullivan Equipment Company prepared the following income statement, based on the variable costing concept: Sullivan Equipment Company Variable Gosling Income Statement For Ihe Month Ended March 31 Sales {14,000 units) $?56,UOD Variable cost of goods sold: Variable cost of goods manufactured $356,400 Inventory, March 31 (2,200 units) (43.400) Total variable cost of goods sold 308,000 Manufacturing margin $448,000 Variable selling and administrative expenses 196,000 Contribution margin $252,000 Fixed costs: Fixed manufacturing costs $64,800 Fixed selling and administrative expenses 56,000 Total xed costs 120,800 Income from operations $13 1,200 D Contribution margin $252,000 Fixed costs: Fixed manufacturing costs $64,800 Fixed selling and administrative expenses 56,000 Total xed costs 120,800 Income from operations $131,200 Prepare an income statement under absorption costing. Round all nal answers to whole dollars. Sullivan Equipment Compilnalr Absorption Costing Income Statement For the Month Ended March 31 VI Cost of goods sold