Question
Income statements under absorption costing and variable costing Patagucci Inc. manufactures and sells athletic equipment. The company began operations on August 1, 2012, and operated
Income statements under absorption costing and variable costing
Patagucci Inc. manufactures and sells athletic equipment. The company began operations on August 1, 2012, and operated at 100% of capacity (64,900 units) during the first month, creating an ending inventory of 5,900 units. During September, the company produced 59,000 garments during the month but sold 64,900 units at $95 per unit. The September manufacturing costs and selling and administrative expenses were as follows:
Number of Units | Unit Cost | Total Cost | ||||
Manufacturing costs in September beginning inventory: | ||||||
Variable | 5,900 | $38.00 | $224,200 | |||
Fixed | 5,900 | 14.00 | 82,600 | |||
Total | $52.00 | $306,800 | ||||
September manufacturing costs: | ||||||
Variable | 59,000 | $38.00 | $2,242,000 | |||
Fixed | 59,000 | 15.40 | 908,600 | |||
Total | $53.40 | $3,150,600 | ||||
Selling and administrative expenses: | ||||||
Variable ($ 18.20 per unit sold) | $1,181,180 | |||||
Fixed | 512,700 | |||||
Total | $1,693,880 |
1.) Prepare an income statement according to the absorption costing concept for September
2.) Prepare an income statement according to the variable costing concept for September.
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