On July 31, the end of the first month of operations, Del Ray Equipment Company prepared the following income statement, based on the variable costing concept:

Del Ray Equipment Company

Variable Costing Income Statement

For the Month Ended July 31, 2016

1 Sales (50,000 units)		$6,250,000
2 Variable cost of goods sold:
3 Variable cost of goods manufactured	$3,100,000
4 Less ending inventory (12,000 units)	600,000
5 Variable cost of goods sold		2,500,000
6 Manufacturing margin		$3,750,000
7 Variable selling and administrative expenses		1,575,000
8 Contribution margin		$2,175,000
9 Fixed costs:
10 Fixed manufacturing costs	$620,000
11 Fixed selling and administrative expenses	487,500	1,107,500
12 Income from operations		$1,067,500

Labels

For the Month Ended July 31, 2016

July 31, 2016

Amount Descriptions

Contribution margin

Cost of goods manufactured

Cost of goods sold

Ending inventory

Fixed manufacturing costs

Fixed selling and administrative expenses

Gross profit

Income from operations

Loss from operations

Manufacturing margin

Sales Selling and administrative expenses

Variable cost of goods manufactured

Variable cost of goods sold

Variable selling and administrative expenses

Prepare an income statement under absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less, Plus or colons (:) will automatically appear if required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Del Ray Equipment Company

Absorption Costing Income Statement

For the Month Ended July 31, 2016

1. Sales		$6,250,00
2. Cost of goods sold:
3.
4.
5.
6.
7.
8.