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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
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 first month. The following data summarize the results for August:
Sales (13,500 units) | $1,620,000 | ||||
Production costs (17,000 units): | |||||
Direct materials | $754,800 | ||||
Direct labor | 362,100 | ||||
Variable factory overhead | 181,900 | ||||
Fixed factory overhead | 120,700 | 1,419,500 | |||
Selling and administrative expenses: | |||||
Variable selling and administrative expenses | $220,000 | ||||
Fixed selling and administrative expenses | 85,200 | 305,200 |
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 Costing Income Statement | |
For the Month Ended August 31 | |
Sales | $ |
Cost of goods sold | |
Gross profit | $ |
Selling and administrative expenses | |
Income from operations | $ |
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b. Prepare an income statement according to the variable costing concept.
Shawnee Motors Inc. | ||
Variable Costing Income Statement | ||
For the Month Ended August 31 | ||
$ | ||
$ | ||
$ | ||
Fixed costs: | ||
$ | ||
$ |
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