Question

Map Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $140 Units in beginning inventory 0 Units produced 7,400 Units sold 7,200 Units in ending inventory 200 Variable costs per unit: Direct materials $42 Direct labor $32 Variable manufacturing overhead $1 Variable selling and administrative $8 Fixed costs: Fixed manufacturing overhead $280,800 Fixed selling and administrative $98,000

Prepare an income statement for the month using the contribution format and the variable costing method.

Prepare an income statement for the month using the absorption costing method.

Answer 1

Prepare an income statement for the month using the contribution format and the variable costing method.

Sales (7200*140)		1008000
Less: Variable cost of goods sold
Direct material	302400
Direct labour	230400
Variable manufacturing overhead	7200
Total variable cost of goods sold		540000
Manufacturing margin		468000
Variable selling and administrative expense		57600
Contribution margin		410400
Fixed cost
Fixed manufacturing overhead	280800
Fixed selling and administrative expense	98000
Total fixed cost		378800
Net operating income		31600

Prepare an income statement for the month using the absorption costing method.

Sales (7200*140)		1008000
Less: cost of goods sold
Direct material	302400
Direct labour	230400
Variable manufacturing overhead	7200
Fixed manufacturing overhead	273211
Total cost of goods sold		813211
Gross profit		194789
selling and administrative expense		155600
Net operating income		39189