Question
On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept: Sales
On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:
Sales (18,000 units) | $882,000 | ||||
Cost of goods sold: | |||||
Cost of goods manufactured | $704,000 | ||||
Less ending inventory (4,000 units) | 128,000 | ||||
Cost of goods sold | 576,000 | ||||
Gross profit | $306,000 | ||||
Selling and administrative expenses | 103,000 | ||||
Income from operations | $203,000 |
Question Content Area
a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $66,000 and the variable selling and administrative expenses were $47,000. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.
Ending inventoryFixed selling and administrative expensesSalesVariable cost of goods manufacturedVariable selling and administrative expensesSales | $Sales | |
Variable cost of goods sold: | ||
Fixed manufacturing costsFixed selling and administrative expensesSalesVariable cost of goods manufacturedVariable selling and administrative expensesVariable cost of goods manufactured | $Variable cost of goods manufactured | |
Less ending inventoryLess fixed selling and administrative expensesLess manufacturing costsLess salesLess variable selling and administrative expensesLess ending inventory | Less ending inventory | |
Ending inventoryFixed selling and administrative expensesSalesVariable cost of goods manufacturedVariable cost of goods soldVariable cost of goods sold | Variable cost of goods sold | |
Contribution marginManufacturing marginManufacturing margin | $Manufacturing margin | |
Ending inventoryFixed manufacturing costsFixed selling and administrative expensesSalesVariable selling and administrative expensesVariable selling and administrative expenses | Variable selling and administrative expenses | |
Contribution marginManufacturing marginContribution margin | $Contribution margin | |
Fixed costs: | ||
Ending inventoryFixed manufacturing costsManufacturing marginSalesVariable cost of goods manufacturedFixed manufacturing costs | $Fixed manufacturing costs | |
Ending inventoryFixed selling and administrative expensesSalesVariable cost of goods manufacturedVariable selling and administrative expensesFixed selling and administrative expenses | Fixed selling and administrative expenses | Fixed selling and administrative expenses |
Income from operations | $fill in the blank e7e1c8f66011fb0_20 |
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a. Review the variable costing income statement.
Question Content Area
b. Reconcile the absorption costing income from operations of $203,000 with the variable costing income from operations determined in (a).
Absorption costing income from operations | $fill in the blank 66a8f70b1077019_1 |
Variable costing income from operations | fill in the blank 66a8f70b1077019_2 |
Difference | $fill in the blank 66a8f70b1077019_3 |
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