Question

(SHOW YOUR WORK) 1. Oakes Corporation, which has onty one product, has provided the following data concerning its most recent month of operations: Selling price $108 Units in beginning inventory Units produced 1,100 Units sold 900 Units in ending inventory 200 Variable costs per unit: Direct materials $28 Direct Eabor $30 Variable manufacturing overhead $7 Variable selling and administrative $11 Fixed costs: Fixed manufacturing overhead $14,300 Fixed selling and administrative $1 ,800 Required: a. Prepare a contribution format income statement for the month using variable costing. b. Prepare an income statement for the month using absorption costing.

Answer 1

						PU
	Opening Units	0			Sales	108.00
	Units Produced	1100			DM	28.00
	Total Available Units	1100			DL	30.00
	Units Sold	900			VMOH	7.00
	Closing Units	200			VS&A	11.00
A	Contribution Format Income Statement
	As per Variable Costing
	Sales		97200		Variable Production Cost:
	Less: Variable Cost of Goods Sold		58500	(900*65)	DM	28.00
	Gross Contribution Margin		38700		DL	30.00
	Less: Variable S&A Cost		9900	(900*11)	VMOH	7.00
	Contribution Margin		28800			65.00
	Less: Fixed Production Cost		14300
	Less: Fixed S&A Cost		1800		Variable S&A Cost:	11.00
	Net Operating Income		12700
B	Contribution Format Income Statement
	As per Absorption Costing
	Sales		97200		Unit Cost:
	Less: Cost of Goods Sold		70200	(78*900)	DM	28.00
	Gross Profit		27000		DL	30.00
	Less: Selling & Adminstrative Exp				VMOH	7.00
	Variable		9900	(900*11)	FMOH	13.00	(14300/1100)
	Fixed		1800		Total	78.00
	Net Operating Income		15300