Question

Q&D , Inc. produced 30,000 units and sold 20,000 units in 2018. Assume $600,000 beginning inventory for both variable costing and absorption costing. The following financial information is available for 2018.

Selling price per unit	$100.00
Direct materials per unit	$5.00
Direct labor per unit	$7.00
Variable manufacturing overhead cost per unit	$20.00
Variable operating expense per unit	$12.00
Fixed manufacturing overhead costs	$150,000
Fixed operating expenses	$116,000

Do not enter dollar signs or commas in the input boxes.
Use the negative sign ONLY for a net loss.
Round all answers to the nearest whole number.

a) Determine the operating income under the variable costing method.

Sales		$Answer
Variable cost of goods sold:
Beginning inventory	$Answer
Variable cost of goods manufactured	$Answer
Ending inventory	$Answer
Variable cost of goods sold		$Answer
Contribution margin		$Answer
Fixed costs:
Fixed manufacturing overhead	$Answer
Fixed operating expenses	$Answer	$Answer
Net income		$Answer

b) Determine the operating income under the absorption costing method.

Sales		$Answer
Cost of goods sold:
Beginning inventory	$Answer
Cost of goods manufactured	$Answer
Ending inventory	$Answer
Cost of goods sold		$Answer
Gross profit		$Answer
Operating costs:
Variable operating expense per unit	$Answer
Fixed operating expenses	$Answer	$Answer
Net income		$Answer

Answer 1

	Variable Costing Income Statement
	Sales(20000 X $100)		$ 20,00,000
Less:	Variable Cost of goods sold:
	Beginning Inventory	$   6,00,000
Add:	Variable Manufacturing Cost(30000 X $44)	$ 13,20,000
Less:	Ending Inventory (10000 X $44)	$   4,40,000
	Variable Cost of goods sold		$ 14,80,000
	Contribution margin		$   5,20,000
Less:	Fixed Expenses:
	Fixed Manufacturing overhead	$   1,50,000
	Fixed operating expenses	$   1,16,000	$   2,66,000
	Net operating Loss		$   2,54,000
	Workings:
	Under Variable Costing
	Unit product cost:
	Direct Material		$                  5
	Direct Labour		$                  7
	Varialble Manufaturing overhead		$               20
	Varialble operating overhead		$               12
	Unit product cost		$               44
	Absorbtion Costing Income Statement
	Sales(20000 X $100)		$ 20,00,000
Less:	Cost of Goods Sold
	Beginning Inventory	$   6,00,000
Add:	Cost of Goods manufactured (30000 X $37)	$ 11,10,000
Less:	Ending Inventory (10000 X $37)	$   3,70,000
	Cost of Goods Sold		$ 13,40,000
	Gross Margin		$   6,60,000
Less:	Variable Operating expenses (20000 X $12)	$   2,40,000
Less:	Fixed Operating expenses	$   1,16,000	$   3,56,000
	Net operating Loss		$   3,04,000
	Workings:
	Under Absorption Costing
	Unit product cost:
	Direct Material		$                  5
	Direct Labour		$                  7
	Varialble Manufaturing overhead		$               20
	Fixed Manufacturing overhead ($150000/30000)		$                  5
	Unit product cost		$               37