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: $4,230,000.00 Rhys Company Income Statement - Absorption Costing For the Month Ended July 31, 2016 1 Sales (90,000 units) 2 Cost of goods sold: 3 Cost of goods manufactured $2,775,000.00 + Less ending inventory (21,000 units) 525,000.00 5 Cost of goods sold 6 Gross profit 7 Selling and administrative expenses 8 Income from operations 2,250,000.00 $1,980,000.00 290,000.00 $1,690,000.00 Required: A. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $133,200 and the variable selling and administrative expenses were $108,000. Refer to the Labels and Amount Descriptions fist 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 $1,690,000 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 A. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $133,200 and the variable selling and administrative expenses were $108,000. 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: 76/96 Rhys Company Income Statement - Variable Costing For the Month Ended July 31, 2016 $4,230,000.00 $2,463,400.00 525,000.00 1 Sales 2 Variable cost of goods sold: 3 Variable cost of goods manufactured + Less ending inventory 5 Variable cost of goods sold 6 Manufacturing margin 7 Variable selling and administrative expenses Contribution margin 9 Fixed costs: 10 Fixed selling and administrative expenses Fixed manufacturing costs 12 Income from operations 2,988,400.00 $1,241,600.00 108,000.00 $1,349,600.00 $182,000.00 11 133,200.00 315,200.00 $1,664,800.00 B. Reconcile the absorption costing income from operations of S1,690,000 with the variable costing income from operations previously determined. Score: 0/12 Question not attempted. Rhys Company Income from Operations - Absorption vs. Variable Costing For the Month Ended July 31, 2016 1 Absorption costing income from operations 2 Variable costing income from operations 3 Difference
