Question

1	Sales		$10,800,000.00
2	Manufacturing costs:
3	Direct materials	$6,400,000.00
4	Direct labor	1,600,000.00
5	Variable manufacturing cost	1,280,000.00
6	Fixed manufacturing cost	320,000.00	9,600,000.00
7	Selling and administrative expenses:
8	Variable	$1,080,000.00
9	Fixed	180,000.00	1,260,000.00

	Required:
1.	Prepare an income statement based on the absorption costing concept.*
2.	Prepare an income statement based on the variable costing concept.*
3.	Explain the reason for the difference in the amount of income from operations reported in (1) and (2). * Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter Inventory, August 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign. LabelsAugust 31Cost of goods soldFixed costsFor the Month Ended August 31Variable cost of goods soldAmount DescriptionsContribution marginContribution margin ratioCost of goods manufacturedFixed manufacturing costsFixed selling and administrative expensesGross profitIncome from operationsInventory, August 31Loss from operationsManufacturing marginPlanned contribution marginSalesSales mixSelling and administrative expensesTotal cost of goods soldTotal fixed costsTotal variable cost of goods soldVariable cost of goods manufacturedVariable selling and administrative expenses

Answer 1