What is the cost of goods sold?

Problem 8-38 Variable Costing and Absorption Costing Income Statements; Reconciling Reported Operating Income (LO 8-2, 8-3, 8-4) Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $40. The variable costs of production for one case of cans are as follows: Direct material Direct labor Variable manufacturing overhead Total variable manufacturing cost per case $ 10.00 5.00 9.50 $ 24.50 Variable selling and administrative costs amount to $0.40 per case. Budgeted fixed manufacturing overhead is $632,000 per year, and fixed selling and administrative cost is $40,000 per year. The following data pertain to the company's first three years of operation. Year 1 79,000 Planned production (in units) Finished-goods inventory (in units), January 1 Actual production (in units) Sales (in units) Finished-goods inventory (in units), December 31 79,000 79,000 Year 2 79,000 0 79,000 56,500 22,500 Year 3 79,000 22,500 79,000 90,250 11,250 Actual costs were the same as the budgeted costs. Required: 1. Prepare operating income statements for Chataqua Can Company for its first three years of operations using: a. Absorption costing. Year 1 $ 3,160,000 1,935,500 $ 1,224,500 Year 2 Year 3 $ 2,260,000 $ 3,610,000 1,384,250 2,211,125 X $ 875,750 $ 1,398,875 Sales revenue Less: Cost of goods sold Gross margin Selling and Administrative Expenses Variable selling and administrative Fixed selling and administrative 22,600 36,100 31,600 40,000 40,000 40,000 Operating income $ 1,152,900 $ 813,150 $ 1,322,775