Question
On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 6,000 units and sold 5,200 units. The following income statement was
On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 6,000 units and sold 5,200 units. The following income statement was prepared, based on the variable costing concept:
Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1 | ||||
Sales | $2,028,000 | |||
Variable cost of goods sold: | ||||
Variable cost of goods manufactured | $1,122,000 | |||
EInventory, December 31 | (149,600) | |||
Total variable cost of goods sold | 972,400 | |||
Manufacturing margin | $1,055,600 | |||
Total variable selling and administrative expenses | 244,400 | |||
Contribution margin | $811,200 | |||
Fixed costs: | ||||
Fixed manufacturing costs | $516,000 | |||
Fixed selling and administrative expenses | 161,200 | |||
Total fixed costs | 677,200 | |||
Income from operations | $134,000 |
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Variable costing | $ |
Absorption costing | $ |
On March 31, the end of the first month of operations, Sullivan Equipment Company prepared the following income statement, based on the variable costing concept:
Sullivan Equipment Company Variable Costing Income Statement For the Month Ended March 31 | ||||
Sales (11,700 units) | $514,800 | |||
Variable cost of goods sold: | ||||
Variable cost of goods manufactured | $243,000 | |||
Inventory, March 31 (1,800 units) | (32,400) | |||
Total variable cost of goods sold | 210,600 | |||
Manufacturing margin | $304,200 | |||
Variable selling and administrative expenses | 128,700 | |||
Contribution margin | $175,500 | |||
Fixed costs: | ||||
Fixed manufacturing costs | $54,000 | |||
Fixed selling and administrative expenses | 35,100 | |||
Total fixed costs | 89,100 | |||
Income from operations | $86,400 |
Prepare an income statement under absorption costing. Round all final answers to whole dollars.
Sullivan Equipment Company | ||
Absorption Costing Income Statement | ||
For the Month Ended March 31 | ||
$ | ||
Cost of goods sold: | ||
$ | ||
$ | ||
$ |
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