Absorption and Variable Costing Income Statements During the first month of oper
ID: 2427089 • Letter: A
Question
Absorption and Variable Costing Income Statements
During the first month of operations ended May 31, 2014, Dorm Fridge Company manufactured 9,400 microwaves, of which 8,900 were sold. Operating data for the month are summarized as follows:
129,900
1. Prepare an income statement based on the absorption costing concept.
2. Prepare an income statement based on the variable costing concept.
Sales $1,157,000 Manufacturing costs: Direct materials $573,400 Direct labor 169,200 Variable manufacturing cost 150,400 Fixed manufacturing cost 75,200 968,200 Selling and administrative expenses: Variable $89,000 Fixed 40,900129,900
Dorm Fridge Company Absorption Costing Income Statement For the Month Ended May 31, 2014 Sales Cost of goods sold: Cost of goods manufactured Less inventory, May 31 Cost of goods sold Gross profit Selling and administrative exp Income from operationsExplanation / Answer
Absorption Costing and Variable Costing Income statement is prepared as under:
Dorm Fridge Company Absorption Costing Income Statement For the month Ended May 31, 2014 Particulars Amount ($) Amount ($) Sales 1,157,000 Cost of goods sold: Cost of goods manufactured 968,200 Less: Inventory, may 31 51,500 Cost of goods sold: 916,700 Gross Profit 240,300 Selling and administrative expenses 129,900 Income from operations 110,400