Consider the following information for Presidio Inc\'s most recent year of opera

Question

Consider the following information for Presidio Inc's most recent year of operations. Additional in information for Presidio's most recent year of operations ollows: Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($273,470 -2.300 2,300 1,400 $ 730.00 70.00 100.00 50.00 units) Total variable selling expenses ($12 per unit sold) Total fixed general and administrative expenses 18.90 16,800.00 84,000.00 Required 2. Complete a full absorption costing income statement and a variable costing income statement for Presidio. Assume there was no beginning inventory Presidio, Inc. Full Absorption Income Statement Sales S 1,022,000 Less: Cost of Goods Sold Gross Margin 547,540 General and Administrative Expense Less: Selling Expense (84,000) (16,800 S 446,740 Not Operating Income Presidio, Inc. Contribution Margin Income Statement Sales revenue $1,022,000

Explanation / Answer

CALCUALTION OF cost of production units by using absorption and variable Costing Opening stock 0 Unit Produced = 2300 Unit Sold = 1400 Closing Stock = 900 Year 1 Caclualtion of recovery rate of Fixed Expenses = Fixed Expesnes = $                    2,73,470 No. of units to be Produced = $                          2,300 Cost Per unit = $                       118.90 Particulars Absorption Costing Variable Costing Direct Material Per unit $                          70.00 $                          70.00 Direct Labour Per Unit $                       100.00 $                       100.00 Vairable Manufacturing Overhead $                          50.00 $                          50.00 Fixed Manufacturing Overhead $                       118.90 $                                 -   Cost of Production per unit $                       338.90 $                       220.00 ABOSRPTION COSTING INCOME STATEMENTS Absorption Costing Sales (1400 units * $ 730) $                 10,22,000 Cost of Goods Sold Beginning inventory $                                 -   Cost of Goods Manufactured (2300 units * 338.90) $                    7,79,470 Less: Ending Inventory (900 Units * 338.90) $                    3,05,010 Cost of Goods Sold $                    4,74,460 Gross Profit $                    5,47,540 Less : Variable Selling Expenses $                       16,800 Fixed General and administrative Expenses $                       84,000 Net Income $                    4,46,740 VARIABLE COSTING INCOME STATEMENTS Variable Costing Sales $                 10,22,000 Cost of Goods Sold Beginning inventory $                                 -   Cost of Goods Manufactured (2300 units * 220) $                    5,06,000 Less: Ending Inventory (900 Units * 220) $                    1,98,000 Cost of Goods Sold $                    3,08,000 Variable Selling Expenses $                       16,800 Gross Profit $                    6,97,200 Less: Fixed Manufacturing overhead $                    2,73,470 Less: Fixed General and administrative Expenses $                       84,000 Net Income $                    3,39,730

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