On June 30, 2016, the end of the first month of operations, Tudor Manufacturing
ID: 2423215 • Letter: O
Question
On June 30, 2016, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept:
Tudor Manufacturing Co.
Income Statement - Variable Costing
For the Month Ended June 30, 2016
1
Sales (415,000 units)
$6,950,000.00
2
Variable cost of goods sold:
3
Variable cost of goods manufactured (500,000 units × $13 per unit)
$6,500,000.00
4
Less ending inventory (85,000 units × $13 per unit)
1,105,000.00
5
Variable cost of goods sold
5,395,000.00
6
Manufacturing margin
$1,555,000.00
7
Variable selling and administrative expenses
79,000.00
8
Contribution margin
$1,476,000.00
9
Fixed costs:
10
Fixed manufacturing costs
$140,000.00
11
Fixed selling and administrative expenses
76,000.00
216,000.00
12
Income from operations
$1,260,000.00
Tudor Manufacturing Co.
Income Statement - Variable Costing
For the Month Ended June 30, 2016
Explanation / Answer
Absorption costing income statement Tudor Manufacturing Co Particulars calculation Amount ($) Sales ( 451000 units) 6950000 Variable cost of Goods manufactured 65,00,000 Fixed manufacturing costs 1,40,000 Cost Of Production 66,40,000 Less closing Inventory ( 664000*85000/500000) -11,28,800 Cost of Goods sold 55,11,200 Less: Variable selling & admin OH -79,000 Less: Fixed selling & admin OH -76,000 Cost of Sales 53,56,200 -5356200 Income from Operations 1593800 Reconcilation of Variable cost income statement with the Absorption Costing Particulars calculation Amount ($) Income from Operations as per absorption cost 15,93,800 Less: Fixed Manufacturing Cost(140000*85000/500000) -37,200 FixedSelling & variable selling -2,96,600 12,60,000
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