On July 31, 2016, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

Rhys Company

Income Statement - Absorption Costing

For the Month Ended July 31, 2016

1	Sales (96,000 units)		$4,440,000.00
2	Cost of goods sold:
3	Cost of goods manufactured	$3,120,000.00
4	Less ending inventory (24,000 units)	624,000.00
5	Cost of goods sold		2,496,000.00
6	Gross profit		$1,944,000.00
7	Selling and administrative expenses		288,000.00
8	Income from operations		$1,656,000.00

Required:

A.

Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Less or Plus and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

B.

Reconcile the absorption costing income from operations of $1,656,000 with the variable costing income from operations determined in (A).

Labels and Amount Descriptions

Contribution margin

Cost of goods manufactured

Ending inventory

Fixed costs

Fixed manufacturing costs

Fixed selling and administrative expenses

Gross profit

Income from operations

Manufacturing margin

Sales

Variable cost of goods manufactured

Variable cost of goods sold

Variable selling and administrative expenses

On July 31, 2016, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

Rhys Company

Income Statement - Absorption Costing

For the Month Ended July 31, 2016

1	Sales (96,000 units)		$4,440,000.00
2	Cost of goods sold:
3	Cost of goods manufactured	$3,120,000.00
4	Less ending inventory (24,000 units)	624,000.00
5	Cost of goods sold		2,496,000.00
6	Gross profit		$1,944,000.00
7	Selling and administrative expenses		288,000.00
8	Income from operations		$1,656,000.00

	Required:
A.	Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Less or Plus and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.
B.	Reconcile the absorption costing income from operations of $1,656,000 with the variable costing income from operations determined in (A).

X

Labels and Amount Descriptions

Labels and Amount Descriptions
Contribution margin
Cost of goods manufactured
Ending inventory
Fixed costs
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Income from operations
Manufacturing margin
Sales
Variable cost of goods manufactured
Variable cost of goods sold
Variable selling and administrative expenses

X

Income Statement

Shaded cells have feedback.

A. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Less or Plus and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

Score: 28/96

Rhys Company

Income Statement - Variable Costing

For the Month Ended July 31, 2016

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