O\'?Neill\'s Products manufactures a single product.? Cost, sales, and productio
ID: 2394489 • Letter: O
Question
O'?Neill's Products manufactures a single product.? Cost, sales, and production information for the company and its single product is as? follows:
-Selling price per unit is $53
-Variable manufacturing costs per unit manufactured (includes direct materials [DM], direct labor [DL], and variable MOH $27
-Variable operating expenses per unit sold $1
-Fixed manufacturing overhead (MOH) in total for the year $64,000
-Fixed operating expenses in total for the year $91000
-Units manufactured and sold for the year 8,000 units
Requirement 1. Prepare an income statement for the upcoming year using variable costing..
O'Neill's Products
Contribution Margin Income Statement (Variable Costing)
For the Year Ended December 31
Sales revenue
$424,000
Less:
Variable expenses
Variable cost of goods sold
216,000
Variable operating expenses
8,000
Contribution margin
200,000
Less:
Fixed expenses
Fixed manufacturing overhead
64,000
Fixed operating expenses
91,000
Operating income
$45,000
Requirement 2. Prepare an income statement for the upcoming year using absorption costing.
O'Neill's Products
Income Statement (Absorption Costing)
For the Year Ended December 31
Sales revenue
$424,000
Less:
Cost of goods sold
Gross profit
Less:
Operating expenses
99,000
Operating income
Please help me find the Cost of Goods Sold, Gross Profit, and Operating Income. Thank you!!
O'Neill's Products
Contribution Margin Income Statement (Variable Costing)
For the Year Ended December 31
Sales revenue
$424,000
Less:
Variable expenses
Variable cost of goods sold
216,000
Variable operating expenses
8,000
Contribution margin
200,000
Less:
Fixed expenses
Fixed manufacturing overhead
64,000
Fixed operating expenses
91,000
Operating income
$45,000
Explanation / Answer
Income Statement under Absorption costing: Sales revenue 424000 Less: Cost of Goods sold 280,000 (8000 units @35) Gross Margin 144,000.00 Less: Operating expense 99000 (8000*1+91000) Net income 45,000.00 Note: Cost per unit under abosrption costing: Variable manufacturing cost 27 Fixed manufacturing cost (64000 /8000 units) 8 Unit product cost 35 Note: Operating expense: variable (8000 units @1) 8000 Fixed $91,000 Total Operating expnses 99,000
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