On November 30, the end of the first month of operations, Weatherford Company pr

Question

On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept: Weatherford Company Absorption Costing Income Statement For the Month Ended November 30 1 Sales (22,000 units) $2,200,000.00 2 Cost of goods sold: 3 Cost of goods manufactured (25,200 units) $2,016,000.00 4 Inventory, November 30 (3,200 units) (256,000.00) 5 Total cost of goods sold 1,760,000.00 6 Gross profit $440,000.00 7 Selling and administrative expenses 160,000.00 8 Income from operations $280,000.00 If the fixed manufacturing costs were $201,600 and the fixed selling and administrative expenses were $110,000, prepare an income statement according to the variable costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter all amounts as positive numbers. Round your cost per unit answer to two decimal places and final answers to nearest whole dollar.

Explanation / Answer

Unit manufactured = 22000 unit sold+ 3200 ending inventory - 0 beginning inventory = 25200 units

Variable cost of goods manufactured = Total cost of goods manufactured -fixed manufacturing cost

                = 2016000- 201600

                = 1814400

variable cost of goods sold = 1814400 *22000/25200 = 1584000

variable selling and administrative cost = 160000-110000 = 50000

Variable costing Income statement

for the period ended Nov 30

Variable costing Income statement

for the period ended Nov 30

sales 2200000 less:variable expense variable cost of goods sold 1584000 variable selling and administrative cost 50000 Total variable cost (1634000) contribution margin 566000 Fixed expense Fixed manufacturing cost 201600 Fixed selling and administrative cost 110000 Total fixed cost (311600) Income from operations 254400

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