Question

In: Accounting

Income statements under absorption costing and variable costing Fresno Industries Inc. manufactures and sells high-quality camping...

Income statements under absorption costing and variable costing

Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (181,000 units) during the first month, creating an ending inventory of 17,000 units. During February, the company produced 164,000 units during the month but sold 181,000 units at $600 per unit. The February manufacturing costs and selling and administrative expenses were as follows:

Number of Units Unit Cost Total
Cost
Manufacturing costs in February 1 beginning inventory:
Variable 17,000 $300.00 $5,100,000
Fixed 17,000 26.00 442,000
Total $326.00 $5,542,000
Manufacturing costs in February:
Variable 164,000 $300.00 $49,200,000
Fixed 164,000 30.00 4,920,000
Total $330.00 $54,120,000
Selling and administrative expenses in February:
Variable 181,000 20.00 $3,620,000
Fixed 181,000 3.00 543,000
Total 23.00 $4,163,000

a. Prepare an income statement according to the absorption costing concept for February. Enter all amounts as positive numbers.

Fresno Industries Inc.
Absorption Costing Income Statement
For the Month Ended February 28
Sales $
Cost of goods sold:
Beginning inventory $
Cost of goods manufactured   
Total cost of goods sold   
Gross profit $
Selling and administrative expenses   
Operating income $

b. Prepare an income statement according to the variable costing concept for February. Enter all amounts as positive numbers.

Fresno Industries Inc.
Variable Costing Income Statement
For the Month Ended February 28
Sales $
Variable cost of goods sold   
Manufacturing margin $
Variable selling and administrative expenses   
Contribution margin $
Fixed costs:
Fixed manufacturing costs $
Fixed selling and administrative expenses   
Total fixed costs   
Operating income

Solutions

Expert Solution

a)
Fresno Industries Inc.
Absorption Costing Income Statement
For the Month Ended February 28
Sales (181,000 units * $600 per unit) $108,600,000
Less: Cost of Goods Sold:
Beginning Inventory $5,542,000
Cost of goods manufactured $54,120,000
Less: Ending Inventory (17,000 + 164,000 - 181,000) $0
Total Cost of Goods Sold ($59,662,000)
Gross Profit $48,938,000
Less: Selling and administrative expenses ($4,163,000)
Operating Income $44,775,000
b)
Fresno Industries Inc.
Variable Costing Income Statement
For the Month Ended February 28
Sales (181,000 units * $600 per unit) $108,600,000
Less: Variable cost of goods sold ($5,100,000 + $49,200,000) ($54,300,000)
Manufacturing margin $54,300,000
Less: Variable selling and administrative expenses ($3,620,000)
Contribution margin $50,680,000
Less: Fixed manufacturing costs ($442,000 + $4,920,000) ($5,362,000)
Less: Fixed selling and administrative expenses ($543,000)
Total Fixed costs ($5,905,000)
Operating Income $44,775,000

Related Solutions

Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (46,200 units) during the first month, creating an ending inventory of 4,200 units. During February, the company produced 42,000 units during the month but sold 46,200 units at $100 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (77,000 units) during the first month, creating an ending inventory of 7,000 units. During February, the company produced 70,000 units during the month but sold 77,000 units at $90 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (62,700 units) during the first month, creating an ending inventory of 5,700 units. During February, the company produced 57,000 units during the month but sold 62,700 units at $80 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping...
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (39,600 units) during the first month, creating an ending inventory of 3,600 units. During February, the company produced 36,000 units during the month but sold 39,600 units at $125 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost...
   Income statements under absorption costing and variable costing Fresno Industries Inc. manufactures and sells high-quality...
   Income statements under absorption costing and variable costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (160,000 units) during the first month, creating an ending inventory of 25,000 units. During February, the company produced 135,000 units during the month but sold 160,000 units at $570 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (59,400 units) during the first month, creating an ending inventory of 5,400 units. During June, the company produced 54,000 garments during the month but sold 59,400 units at $100 per unit. The June manufacturing costs and selling and administrative expenses were as follows:...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (55,000 units) during the first month, creating an ending inventory of 5,000 units. During June, the company produced 50,000 garments during the month but sold 55,000 units at $90 per unit. The June manufacturing costs and selling and administrative expenses were as follows:...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (66,000 units) during the first month, creating an ending inventory of 6,000 units. During June, the company produced 60,000 garments during the month but sold 66,000 units at $95 per unit. The June manufacturing costs and selling and administrative expenses were as follows:...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (61,600 units) during the first month, creating an ending inventory of 5,600 units. During June, the company produced 56,000 garments during the month but sold 61,600 units at $90 per unit. The June manufacturing costs and selling and administrative expenses were as follows:...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (41,800 units) during the first month, creating an ending inventory of 3,800 units. During June, the company produced 38,000 garments during the month but sold 41,800 units at $95 per unit. The June manufacturing costs and selling and administrative expenses were as follows:...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT