Variable Costing Income Statement

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 (15,000 units)					$750,000
Cost of goods sold:
	Cost of goods manufactured		$571,500
	Less ending inventory (3,000 units)		95,250
	Cost of goods sold				476,250
Gross profit					$273,750
Selling and administrative expenses					57,000
Income from operations					$216,750

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $36,000 and the variable selling and administrative expenses were $26,000. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

Rhys Company
Income Statement-Variable Costing
For the Month Ended July 31
Sales		$fill in the blank 09370b06f075f88_2
Variable cost of goods sold:
Variable cost of goods manufactured	$fill in the blank 09370b06f075f88_4
Less ending inventory	fill in the blank 09370b06f075f88_6
Variable cost of goods sold		fill in the blank 09370b06f075f88_8
Manufacturing margin		$fill in the blank 09370b06f075f88_10
Variable selling and administrative expenses		fill in the blank 09370b06f075f88_12
Contribution margin		$fill in the blank 09370b06f075f88_14
Fixed costs:
Fixed manufacturing costs	$fill in the blank 09370b06f075f88_16
Fixed selling and administrative expenses	fill in the blank 09370b06f075f88_18	fill in the blank 09370b06f075f88_19
Income from operations		$fill in the blank 09370b06f075f88_20

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b. Reconcile the absorption costing income from operations of $216,750 with the variable costing income from operations determined in (a).

Reconciliation of Absorption and Variable Costing Income
Absorption costing income from operations	$fill in the blank ee6e74fd9ffcfd3_1
Variable costing income from operations	fill in the blank ee6e74fd9ffcfd3_2
Difference	$fill in the blank ee6e74fd9ffcfd3_3