Question

Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 9,200 flat panel televisions, of which 8,600 were sold. Operating data for the month are summarized as follows:

Sales		$1,548,000
Manufacturing costs:
Direct materials	$782,000
Direct labor	230,000
Variable manufacturing cost	202,400
Fixed manufacturing cost	101,200	1,315,600
Selling and administrative expenses:
Variable	$120,400
Fixed	55,400	175,800

Required:

1. Prepare an income statement based on the absorption costing concept.

YoSan Inc.
Absorption Costing Income Statement
For the Month Ended July 31
Sales		$fill in the blank 3cabcef7c03c065_2
Cost of goods sold:
Cost of goods manufactured	$fill in the blank 3cabcef7c03c065_4
Inventory, July 31	fill in the blank 3cabcef7c03c065_6
Total cost of goods sold		fill in the blank 3cabcef7c03c065_8
Gross profit		$fill in the blank 3cabcef7c03c065_10
Selling and administrative expenses		fill in the blank 3cabcef7c03c065_12
Income from operations		$fill in the blank 3cabcef7c03c065_14

Feedback

1. Sales - (cost of goods manufactured - ending inventory*) = Gross profit; gross profit - selling and administrative expenses = income from operations
*(Manufactured Units - Sold units) x (total manufacturing costs/manufactured units)

Learning Objective 1 and Learning Objective 2.

2. Prepare an income statement based on the variable costing concept.

YoSan Inc.
Variable Costing Income Statement
For the Month Ended July 31
Sales		$fill in the blank c9363200df8dfa4_2
Variable cost of goods sold:
Variable cost of goods manufactured	$fill in the blank c9363200df8dfa4_4
Inventory, July 31	fill in the blank c9363200df8dfa4_6
Total variable cost of goods sold		fill in the blank c9363200df8dfa4_8
Manufacturing margin		$fill in the blank c9363200df8dfa4_10
Variable selling and administrative expenses		fill in the blank c9363200df8dfa4_12
Contribution margin		$fill in the blank c9363200df8dfa4_14
Fixed costs:
Fixed manufacturing costs	$fill in the blank c9363200df8dfa4_16
Fixed selling and administrative expenses	fill in the blank c9363200df8dfa4_18
Total fixed costs		fill in the blank c9363200df8dfa4_20
Income from operations		$fill in the blank c9363200df8dfa4_22

Answer 1