Variable Costing Income Statement

On July 31, 2016, the end of the first month of operations, Holton Company prepared the following income statement, based on the

absorption costing

concept:

Sales (22,000 units)					$1,078,000
Cost of goods sold:
	Cost of goods manufactured		$843,750
	Less ending inventory (5,000 units)		156,250
	Cost of goods sold				687,500
Gross profit					$390,500
Selling and administrative expenses					84,000
Income from operations					$306,500

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $54,000 and the variable selling and administrative expenses were $38,000. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

Holton Company
Income Statement-Variable Costing
For the Month Ended July 31, 2016
Sales		$
Variable cost of goods sold:
Variable cost of goods manufactured	$
Less ending inventory
Variable cost of goods sold
Manufacturing margin		$
Variable selling and administrative expenses
Contribution margin		$
Fixed costs:
Fixed manufacturing costs	$
Fixed selling and administrative expenses
Income from operations		$