The following data are from the accounting records of Niles Castings for year 2. Units produced...

The following data are from the accounting records of Niles Castings for year 2.


Units produced and sold		88,000
Total revenues and costs
Sales revenue	$	340,000
Direct materials costs		70,000
Direct labor costs		36,000
Variable manufacturing overhead		17,000
Fixed manufacturing overhead		43,000
Variable marketing and administrative costs		16,500
Fixed marketing and administrative costs		37,000

a. Prepare a gross margin income statement.

b. Prepare a contribution margin income statement.

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Expert Solution

NILES CASTINGS ABSORPTION COSTING INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 ,YEAR 2
Sales revenue		340000
less:Cost of goods sold
Direct material	70000
Direct labor	36000
variable manufacturing overhead	17000
Fixed manufacturing overhead	43000
Total cost of goods sold		(166000)
Gross margin		174000
less:Selling and administrative expense
Variable	16500
Fixed	37000
Total Selling and administrative expense		(53500)
Net operating income		120500

NILES CASTINGS CONTRIBUTION MARGIN INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 ,YEAR 2
Sales revenue		340000
less:Variable expenses
Direct material	70000
Direct labor	36000
variable manufacturing overhead	17000
Variable marketing and administrative costs	16500
Total variable expenses		(139500)
contribution margin		200500
less:Fixed cost
Fixed manufacturing overhead	43000
Fixed Fixed marketing and administrative costs	37000
Total fixed expense		(80000)
Net operating income		120500

ekkarill92 answered 5 months ago

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