Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (41,000 units X $43.10 per unit) Cost of goods sold (41,000 units x $24 per unit) Gross margin Selling and administrative expenses Net operating income $1,767,100 984,000 783,100 512,500 s 270,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $5 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($282,000 + 47,000 units) Absorption costing unit product cost $ 9 5 4 6 $ 24 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement 0 0 0 $ 0 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income Absorption costing net operating income ! Required information [The following information applies to the questions displayed below.) Chuck Wagon Grills, Inc., makes a single product-a handmade specialty barbecue grill that it sells for $210. Data for last year's operations follow: 24,000 21,000 3,000 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs 50 80 20 10 $ 160 $ 840,000 315,000 $1,155,000 Required: 1. Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill. 2. Assume that the company uses absorption costing. Prepare an income statement for last year. Required 1 Required 2 Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill. Unit product cost Required 1 Required 2 Assume that the company uses absorption costing. Prepare an income statement for last year. Chuck Wagon Grills, Inc. Absorption Costing Income Statement Net operating income(loss)
