Question
Income Statements under The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.Absorption Costing and The
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Income Statements under The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.Absorption Costing and The concept that considers the cost of products manufactured to be composed only of those manufacturing costs that increase or decrease as the volume of production rises or falls (direct materials, direct labor, and variable factory overhead).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 (40,700 units) during the first month, creating an ending inventory of 3,700 units. During June, the company produced 37,000 garments during the month but sold 40,700 units at $115 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 3,700 $46.00 $170,200 Fixed 3,700 17.00 62,900 Total $63.00 $233,100 Manufacturing costs in June: Variable 37,000 $46.00 $1,702,000 Fixed 37,000 18.70 691,900 Total $64.70 $2,393,900 Selling and administrative expenses in June: Variable 40,700 22.10 $899,470 Fixed 40,700 7.00 284,900 Total 29.10 $1,184,370 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 - Beginning inventory
- Cost of goods manufactured
- Gross profit
- Sales
- Selling and administrative expenses
$ Cost of goods sold: - Beginning inventory
- Cost of goods manufactured
- Cost of goods sold
- Gross profit
- Selling and administrative expenses
$ - Cost of goods manufactured
- Cost of goods sold
- Gross profit
- Sales
- Selling and administrative expenses
- Beginning inventory
- Cost of goods manufactured
- Gross profit
- Selling and administrative expenses
- Total cost of goods sold
- Cost of goods manufactured
- Cost of goods sold
- Gross profit
- Sales
- Selling and administrative expenses
$ - Beginning inventory
- Cost of goods manufactured
- Gross profit
- Sales
- Selling and administrative expenses
- Income from operations
- Loss from operations
$ Feedback
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 - Contribution margin
- Fixed selling and administrative expenses
- Manufacturing margin
- Sales
- Variable selling and administrative expenses
$ - Contribution margin
- Manufacturing margin
- Sales
- Variable cost of goods sold
- Variable selling and administrative expenses
- Fixed manufacturing costs
- Manufacturing margin
- Sales
- Variable cost of goods sold
- Variable selling and administrative expenses
$ - Contribution margin
- Manufacturing margin
- Sales
- Variable cost of goods sold
- Variable selling and administrative expenses
- Contribution margin
- Fixed manufacturing costs
- Fixed selling and administrative expenses
- Manufacturing margin
- Sales
$ Fixed costs: - Contribution margin
- Fixed manufacturing costs
- Sales
- Variable cost of goods sold
- Variable selling and administrative expenses
$ - Fixed selling and administrative expenses
- Manufacturing margin
- Sales
- Variable cost of goods sold
- Variable selling and administrative expenses
- Contribution margin
- Income from operations
- Manufacturing margin
- Sales
- Total fixed costs
- Income from operations
- Loss from operations
$ Feedback
c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)?
Under the
- absorption costing
- variable costing
- absorption costing
- variable costing
- absorption costing
- variable costing
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