Value Strings produces student-grade violins for beginning violin students. The company produced 2,500 violins in its first month of operations. At month-end. 750 finished violins remained unsold. There was no inventory in work in process. Violins were sold for $122.50 each. Total costs from the month are as follows: Click on the icon to view the data) The company prepares traditional (absorption costing) income statements for its bankers. Value Strings would also like to prepare contribution margin income statements for management use. Read the requirements Compute the following amounts that would be shown on these income statements: Requirement 1. Gross profit Identify the formula, then compute the gross profit. Gross profit = Requirement 2. Contribution margin Identify the formula, then compute the contribution margin. Contribution margin Requirement 3. Total expenses shown below the gross profit line - Total expenses below the gross profit line Requirement 4. Total expenses shown below the contribution margin line Total expenses below the contribution margin line Requirement S. Dollar value of ending inventory under absorption costing The dollar value of ending inventory under absorption costing is Requirement 6. Dollar value of ending inventory under variable costing The dollar value of ending inventory under variable costing is Requirement 7. Which income statement will have a higher operating income? By how much? Explain income statement will have a higher operating income by The Under absorption costing Under variable costing, these costs are * Data Table - Direct materials used $ 125,500 Direct labor $ 50,000 32,000 42,500 Variable manufacturing overhead $ Fixed manufacturing overhead $ Variable selling and administrative expenses .. $ Fixed selling and administrative expenses .... 8,000 12,100 Print Done X 0 Requirements Compute the following amounts that would be shown on these income statements: 1. Gross profit 2. Contribution margin 3. Total expenses shown below the gross profit line 4. Total expenses shown below the contribution margin line 5. Dollar value of ending inventory under absorption costing 6. Dollar value of ending inventory under variable costing 7. Which income statement will have a higher operating income? By how much? Explain. Print Done