Income Statements under Absorption and Variable Costing Shawnee Motors Inc. asse
ID: 2437034 • Letter: I
Question
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August Sales (20,000 units) Production costs (26,000 units): $2,400,000 Direct materials Direct labor Variable factory overhead Fixed factory overhead $1,154,400 553,800 278,200 184,600 2,171,000 Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $336,500 130,300 466,800 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the onth Ended August 31 Sales Cost of goods sold Gross profit Selling and administrative Income from operationsExplanation / Answer
a Sales 2400000 Cost of goods sold 1670000 =2171000/26000*20000 Gross Profit 730000 Selling and administrative expenses 466800 Income from operations 263200 b Sales 2400000 Variable cost of goods sold 1528000 =(2171000-184600)/26000*20000 Manufacturing margin 872000 Variable selling and administrative expenses 336500 Contribution margin 535500 Fixed costs: Fixed factory overhead 184600 Fixed selling and administrative expenses 130300 Total fixed costs 314900 Income from operations 220600