Variable Costing Income Statement On November 30, the end of the first month of operations, Weatherford...

Variable Costing Income Statement

On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept:

Weatherford Company Absorption Costing Income Statement For the Month Ended November 30
Sales (2,500 units)		$52,500
Cost of goods sold:
Cost of goods manufactured (2,900 units)	$43,500
Inventory, November 30 (400 units)	(6,000)
Total cost of goods sold		37,500
Gross profit		$15,000
Selling and administrative expenses		8,530
Income from operations		$6,470

Assume the fixed manufacturing costs were $9,135 and the fixed selling and administrative expenses were $4,180.

Prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.

Weatherford Company
Variable Costing Income Statement
For the Month Ended November 30
Sales		$
Variable cost of goods sold:
Variable cost of goods manufactured	$
Inventory, November 30
Total variable cost of goods sold
Manufacturing margin		$
Variable selling and administrative expenses
Contribution margin		$
Fixed costs:
Fixed manufacturing costs	$
Fixed selling and administrative expenses
Total fixed costs
Income from operations		$

Solutions

Expert Solution

Answer:

Variable costing Income statement
For the month ended November 30

Sales		$52,500
Variable cost of goods sold:
Variable cost of goods manufactured	34,365		(43,500-9,135)
Inventory, November 30	(4,740)		(43,500-9,135)/2,900*400
Total Variable cost of goods sold		29,625
Manufacturing margin		22,875
Variable selling and administrative expenses		(4,350)	=8,530-4,180
Contribution margin		18,525
Fixed costs:
Fixed manufacturing costs	9,135
Fixed selling and administrative expenses	4,180
Total fixed costs		13,315
Income from operations		5,210

Notes:

Unit manufactured = 2,500 unit sold+ 400 ending inventory - 0 beginning inventory = 2,900 units

Variable cost of goods manufactured = Total cost of goods manufactured -fixed manufacturing cost

= 43,500-9,135

= 34,365

Variable selling and administrative cost = 8,530-4,180 = 4,350

ekkarill92 answered 7 months ago

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