Income Statements, Variable and Absorption Costing

The following information pertains to Vladamir, Inc., for last year:

Beginning inventory, units		1,400
Units produced		100,000
Units sold		101,000
Variable costs per unit:
Direct materials		$8.00
Direct labor		$9.00
Variable overhead		$1.00
Variable selling expenses		$2.00
Fixed costs per year:
Fixed overhead		$300,000
Fixed selling and administrative expenses		$230,000

There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next.

Required:

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1. How many units are in ending inventory? fill in the blank 43c09bffc003fdf_1 units

2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. $fill in the blank 43c09bffc003fdf_2

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3a. Assume the selling price per unit is $30. Prepare an income statement using variable costing.

Vladamir, Inc. Variable-Costing Income Statement For Last Year

Fixed overheadFixed selling and administrative expensesSalesVariable cost of goods soldVariable selling expenses	$- Select -
Less:
Fixed overheadFixed selling and administrative expensesSalesVariable cost of goods sold	- Select -
Fixed overheadFixed selling and administrative expensesSalesVariable selling expenses	- Select -
Contribution margin	$fill in the blank cc72410b4f8003e_7
Less:
Fixed overheadSalesVariable cost of goods soldVariable selling expenses	- Select -
Fixed selling and administrative expensesSalesVariable cost of goods soldVariable selling expenses	- Select -
Operating income	$fill in the blank cc72410b4f8003e_12

Question Content Area

3b. Assume the selling price per unit is $30. Prepare an income statement using absorption costing.

Vladamir, Inc. Absorption-Costing Income Statement For Last Year

Cost of goods soldFixed selling and administrative expensesSales	$- Select -
Less: Cost of goods soldLess: Fixed selling and administrative expensesLess: Sales	- Select -
Gross profit	$fill in the blank fa309afe502ffea_5
Less: Cost of goods soldLess: Selling and administrative expensesLess: Sales	- Select -
Operating income	$fill in the blank fa309afe502ffea_8