Question

1. On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.absorption costing concept:

   Weatherford Company Absorption Costing Income Statement For the Month Ended November 30
   Sales (5,900 units)			$123,900
   Cost of goods sold:
   Cost of goods manufactured (7,000 units)	$105,000
   Inventory, November 30 (1,000 units)	(15,000)
   Total cost of goods sold			90,000
   Gross profit			$33,900
   Selling and administrative expenses			19,330
   Income from operations			$14,570

   Assume the fixed manufacturing costs were $21,000 and the fixed selling and administrative expenses were $9,470.

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

   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

Answer 1

Income Statement-Variable Costing
	Workings	Amount
Sales (5900 units)	$                                                          21	$               123,900
Variable Cost of Goods Sold
Cost of goods manufactured (7000 units)	$                                               105,000
less inventory November 30 (1100 units)	$                                                 16,500
Total Variable Cost of Goods Sold		$                 88,500
Manufacturing Margin		$                 35,400
Variable Selling and Administration expenses	$19330-$9470	$                   9,860
Contribution Margin		$                 25,540
Fixed Costs
Fixed Manufacturing Costs	$                                                 21,000
Fixed Selling and Administration expenses	$                                                    9,470	$                 30,470
Net Operating Income		$                 (4,930)
Cost of Goods Manufactured	$105000/7000	$                         15