Question

The following information pertains to the first year of operation for Crystal Cold Coolers Inc.:

Number of units produced		3,000
Number of units sold		2,300
Unit sales price	$	340
Direct materials per unit		70
Direct labor per unit		40
Variable manufacturing overhead per unit		11
Fixed manufacturing overhead per unit ($180,000/3,000 units)		60
Total variable selling expenses ($14 per unit sold)		32,200
Total fixed general and administrative expenses		56,000

Required:
Prepare Crystal Cold’s full absorption costing income statement and variable costing income statement for the year. (Do not leave any numeric cells blank, enter a zero wherever required.)

Answer 1

Absorption costing income statement:
Sales revenue (2300 units *340)			$782,000
Less: Cost of Goods sold
Material (3000*70)		$210,000
Direct labor (3000*40)		120,000
Variable Oh (3000*11)		33000
Fixed OH		180000
Total cost of goods available		$543,000
Less: ending inventory (543000/3000*700)		126700
Cost of Goods sold			$416,300
Gross Margin			$356,700
Less: Non-manufacturing expense
Variable selling expense (2300*14)			32200
Fixed general and admin expense			56000
Net income			$277,500
Variable costing Income Statement:
Sales revenue (2300 units *340)			$782,000
Less: Variable Cost of Goods sold:
Material (3000*70)		$210,000
Direct labor (3000*40)		120000
Variable Oh (3000*11)		33000
Total cost of goods available		$363,000
Less: ending inventory (700*121)		84700
variable cost of Goods sold			$278,300
Variable selling expense (2300*14)			32200
Contribution margin			$471,500
Less: fixed cost
Fixed manufacturing cost			18000
Fixed general and admin expense			56000
Net income			$235,500