IIDOWS Icon (bottom left of e https// ml art 2 6 AJ Manufacturing Company incurr

Question

IIDOWS Icon (bottom left of e https// ml art 2 6 AJ Manufacturing Company incurred $59,000 of fixed product cost and $47,200 of variable product cost during its first year of operation. Also during its first year, AJ incurred $18,700 of fixed and $14,800 of variable selling and administrative costs The company sold all of the units it produced for $196,000 Required a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP) b. Prepare an income statement using the contribution margin approach DeLL

Explanation / Answer

1 Revenue 196000 Cost of goods sold 106200 =59000+47200 Gross margin 89800 Selling and administrative expense 33500 =18700+14800 Net income 56300 2 Revenue 196000 Variable cost 62000 =47200+14800 Contribution margin 134000 Fixed cost 77700 =59000+18700 Net income 56300

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