Whitman Company has just completed its first year of operations. The company\'s

Question

Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (41,000 units x $44.10 per unit) Cost of goods sold (41,000 units x $24 per unit) Gross margin Selling and administrative expenses Net operating income $1,808,100 984,000 824,100 471,500 $352,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($306,00051,000 units) Absorption costing unit product cost $ 11 6 $ 24 Required: 1. Redo the company's income statement in the contribution format using variable costing 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above

Explanation / Answer

Solution 1:

Solution 2:

Variable Costing Income Statement - Whitman Company Particulars Total Sales $1,808,100.00 Variable Cost: Direct Material $451,000.00 Direct Labor $164,000.00 Variable manufacturing overhead $123,000.00 Variable Selling and administrative expense $164,000.00 Total Variable Costs $902,000.00 Contribution Margin $906,100.00 Fixed Cost: Fixed Manufacturing Overhead $306,000.00 Fixed Selling and administrative expense $307,500.00 Total fixed costs $613,500.00 Net Operating Income $292,600.00

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.