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 (38,000 units X $41.60 per unit) $1,588,880 Cost of goods sold (38,000 units * $23 per unit) 874,000 Gross margin 706,880 Selling and administrative expenses 437,000 Net operating income $ 269,888 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($235,000 + 47,000 units) Absorption costing unit product cost $ 10 5 3 $ 23 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 Ney *** 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 op 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 Sales $ 1,580,800 Variable expenses Variable selling and administrative $ 846,000 Indirect materials 470,000 Indirect labor 235,000 Fixed manufacturing overhead 141,000 1,692,000 Contribution margin (111.200) Variable expenses 0 $ (111,200) Required 2 > Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($235,000 47,800 units) Absorption costing unit product cost $ 10 5 3 5 $ 23 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 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 Varioblo costing net oporating income $ 224,800 Add: Fixed manufacturing overhead cost deferred in Inventory under absorption costing 45,000 Absorption costing net operating income $ 269,800 Required 1
