Variable and Absorption Costing

Ansara Company had the following abbreviated income statement for the year ended December 31, 20Y2:

(in millions)
Sales	$26,700
Cost of goods sold	$22,700
Selling, administrative, and other expenses	2,400
Total expenses	$25,100
Income from operations	$1,600

Assume that there were $5,810 million fixed manufacturing costs and $1,320 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows:

January 1	$3,170 million
December 31	$3,700 million

Assume that 20% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period.

a. Prepare an income statement according to the variable costing concept for Ansara Company for 20Y2.

Ansara Company Variable Costing Income Statement For the Year Ended December 31, 20Y2 (in millions) Sales $26,700 Variable cost of goods sold: Beginning inventory Fixed costs