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In: Accounting

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.

Solutions

Expert Solution

a)

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

b)

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 11 months ago
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