Question

The following information pertains to Chacon Inc. for last year:

Beginning inventory in units		5,200
Units produced		20,600
Units sold		23,500
Costs per unit:
Direct materials	$8.50
Direct labor	$3.60
Variable overhead	$1.10
Fixed overhead*	$4.35
Variable selling expenses	$2.80
Fixed selling and administrative expenses	$23,700

* Fixed overhead totals $89,610 per year.

Assume that the selling price is $29 per unit.

1. Calculate operating income using absorption costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Score: 10/67

Chacon Inc.

Absorption-Costing Income Statement

For Last Year

1	✔
2
3
4
5
6
7

2. Calculate operating income using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Question not attempted.

Score: 0/83

Chacon Inc.

Variable-Costing Income Statement

For Last Year

1
2
3
4
5
6
7
8
9

Answer 1

1. Calculate operating income using absorption costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Score: 10/67

Chacon Inc.

Absorption-Costing Income Statement

For Last Year

1	Sales		681500
2	Cost of goods sold		412425
3	Gross profit		269075
4	Selling and administrative expense
5	Variable selling and administrative expense	65800
6	Fixed selling and administrative expense	23700	89500
7	Net operating income		179575

2. Calculate operating income using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Question not attempted.

Score: 0/83

Chacon Inc.

Variable-Costing Income Statement

For Last Year

1	Sales		681500
2	Less: Variable cost of goods sold		310200
3	Manufacturing margin		371300
4	Variable selling and administrative expense		65800
5	Contribution margin		305500
6	Fixed cost
7	Fixed manufacturing overhead	89610
8	Fixed selling and administrative expense	23700	113310
9	Net operating income		192190