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Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The

Income Statements under Absorption Costing and Variable Costing

Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (61,600 units) during the first month, creating an ending inventory of 5,600 units. During June, the company produced 56,000 garments during the month but sold 61,600 units at $90 per unit. The June manufacturing costs and selling and administrative expenses were as follows:

Number of Units Unit Cost Total Cost
Manufacturing costs in June 1 beginning inventory:
Variable 5,600 $36.00 $201,600
Fixed 5,600 14.00 78,400
Total $50.00 $280,000
Manufacturing costs in June:
Variable 56,000 $36.00 $2,016,000
Fixed 56,000 15.40 862,400
Total $51.40 $2,878,400
Selling and administrative expenses in June:
Variable 61,600 18.20 $1,121,120
Fixed 61,600 7.00 431,200
Total 25.20 $1,552,320

a. Prepare an income statement according to the absorption costing concept for June.

Joplin Industries Inc.
Absorption Costing Income Statement
For the Month Ended June 30
Sales $
Cost of goods sold:
Beginning inventory $
Cost of goods manufactured
Total cost of goods sold
Gross profit $
Selling and administrative expenses
Income from operations $

b. 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
Sales $
Variable cost of goods sold
Manufacturing margin $
Variable selling and administrative expenses
Contribution margin $
Fixed costs:
Fixed manufacturing costs $
Fixed selling and administrative expenses
Total fixed costs
Income from operations $

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