Absorption and Variable Costing Income Statements for Two Months and Analysis Du
ID: 2730551 • Letter: A
Question
Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended May 31, 2015, T-shirt Express Company produced 35,600 designer T-shirts, of which 33,800 were sold. Operating data for the month are summarized as follows: Sales $256,880 Manufacturing costs: Direct materials $153,080 Direct labor 39,160 Variable manufacturing cost 17,800 Fixed manufacturing cost 17,800 227,840 Selling and administrative expenses: Variable $13,520 Fixed 9,870 23,390 During June, T-shirt Express Company produced 32,000 designer T-shirts and sold 33,800 T-shirts. Operating data for June are summarized as follows: Sales $256,880 Manufacturing costs: Direct materials $137,600 Direct labor 35,200 Variable manufacturing cost 16,000 Fixed manufacturing cost 17,800 206,600 Selling and administrative expenses: Variable $13,520 Fixed 9,870 23,390 Hide 1a. Prepare an income statement for May using the absorption costing concept. Enter all amounts as positive numbers. T-shirt Express Company Absorption Costing Income Statement For the Month Ended May 31, 2015 $ Cost of goods sold: $ $ $ Hide 1b. Prepare an income statement for June using the absorption costing concept. Enter all amounts as positive numbers. T-shirt Express Company Absorption Costing Income Statement For the Month Ended June 30, 2015 $ Cost of goods sold: $ $ $ Hide 2a. Prepare an income statement for May using the variable costing concept. Enter all amounts as positive numbers. T-shirt Express Company Variable Costing Income Statement For the Month Ended May 31, 2015 $ Variable cost of goods sold: $ $ $ Fixed costs: $ $ Hide 2b. Prepare an income statement for June using the variable costing concept. Enter all amounts as positive numbers. T-shirt Express Company Variable Costing Income Statement For the Month Ended June 30, 2015 $ Variable cost of goods sold: $ $ $ Fixed costs: $ $ 3a. For May, income from operations reported under costing is less than costing due to part of manufacturing costs that are expensed. 3b. When large changes in inventory levels occur from one period to the next, it is possible for management to misinterpret such increases (or decreases) in income from operations as due to changes in: costs. prices. sales volume. "sales volume", "prices" and "costs" are correct. None of these choices is correct. The correct answer is:Explanation / Answer
Answer:1a
Answer:1b
Answer:2 a
Answer:2b
Absorption costing income statement For the Month Ended May 31, 2015 Particulars May Sales 256880 Cost of goods sold: Beginning inventory 0 Add: Cost of goods manufactured 227840 Goods available for sale 227840 Less: ending inventory 11520 Cost of goods sold 216320 Gross margin 40560 Selling and administrative expenses 23390 Operating income 17170