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Variable and Absorption Costing The following data were adapted from a recent income statement of Caterpillar Inc. ( CAT ) for the year ended December

Variable and Absorption Costing
The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31:
Line Item Description (in millions)
Sales $41,748
Cost of goods sold $(29,082)
Selling, administrative, and other expenses (8,113)
Total expenses $(37,195)
Operating income $4,553
Assume that $10,575 million of cost of goods sold and $5,000 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows:
Line Item Description Amount
Beginning inventory $11,266
Ending inventory 11,402
Also, assume that 30% of the beginning and ending inventories were fixed costs.
Question Content Area
a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million.
Caterpillar Inc.
Variable Costing Income Statement (assumed)
For the Year Ended December 31
Line Item Description Amount Amount
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Variable cost of goods sold:
Beginning inventory $Beginning inventory
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Fixed costs:
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