AP10-1 Master Budget [LO 2] The results of operations for the Preston Manufactur
ID: 2387766 • Letter: A
Question
AP10-1
Master Budget [LO 2]
The results of operations for the Preston Manufacturing Company for the fourth quarter of 2011 were as follows:
Sales $550,000
Less variable cost of sales 330,000
Contribution margin 220,000
Less fixed production costs $110,000
Less fixed selling and administrative expenses 55,000 165,000
Income before taxes 55,000
Less taxes on income 22,000
Net income $33,000
Note: Preston Manufacturing uses the variable costing method. Thus, only variable production costs are included in inventory and cost of goods sold. Fixed production costs are charged to expense in the period incurred.
The company
Explanation / Answer
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