In: Accounting
Company ABC produces a single product. This year the company produced 20,000 units but only sold 15,000 units at the price of $40 each. Variable manufacturing costs (including direct materials, director labor, and variable manufacturing overhead) total $10 per unit. Variable selling and administrative cost is $5 per unit. Fixed manufacturing overhead cost is $100,000 each year. Fixed selling and administrative cost is $120,000 each year. There is no inventory at the beginning of this year.
Solution 1:
ABC Company | ||
Full Absorption income statement For the year ended Dec 31 |
||
Particulars | Details | Amount |
Sales | $600,000.00 | |
Cost of Goods Sold: | ||
Cost of goods produced (20000*$15) | $300,000.00 | |
Add: Opening Inventory | $0.00 | |
Less: Ending Inventory (5000*$15) | $75,000.00 | $225,000.00 |
Gross Profit | $375,000.00 | |
Variable Selling & Administrative Expenses | $75,000.00 | |
Fixed Selling & Administrative Expenses | $120,000.00 | |
Net Operating Income | $180,000.00 |
Solution 2:
ABC Company | ||
Variable costing income statement For the year ended Dec 31 |
||
Particulars | Per unit | Amount |
Sales | $40.00 | $600,000.00 |
Variable Cost: | ||
Variable manufacturing cost | $10.00 | $150,000.00 |
Variable Selling and Administrative Expenses | $5.00 | $75,000.00 |
Contribution | $25.00 | $375,000.00 |
Fixed Manufacturing Overhead | $100,000.00 | |
Fixed Selling & Administrative Expenses | $120,000.00 | |
Net Income | $155,000.00 |