The cost accountant for the Larsen Manufacturing Co. has provided you with the f

Question

The cost accountant for the Larsen Manufacturing Co. has provided you with the following information for the month of July:

                                                 Variable.Cost per unit                                Total Fixed Costs

Direct Labor                                         $27.50

Direct Materials                                     84.75

Manufacturing Overhead                      14.25                                                      $120,000

Marketing Costs                                    5.30                                                            50,000

Administrative Costs                             2.90                                                             75,000

Selling Price                                          210.00

Required: Assuming the company produced and sold 5,000 units, and there were no units in inventory on July1, prepare the following income statements for the month of July:

(a) Contribution margin income statement

(b) Gross margin income statement

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Part B:

Thanks.

Contribution margin income statement Amount Sales (5000*210) 1050000 Less Variable Costs
Direct Labor (5000*27.50) 137500 Direct Materials (5000*84.75) 423750 Manufacturing Overhead (5000*14.25) 71250 Marketing Costs (5000*5.30) 26500 Administrative Costs (5000*2.90) 14500 Contribution Margin 376500 Less Fixed Costs
Manufacturing Overhead 120000 Marketing Costs (5000*5.30) 50000 Administrative Costs 75000 Net Operating Income 131500

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