apter 06 Homework x C Secure https://newconnect.mheducation.com/flow/connect.htm

ID: 2438562 • Letter: A

Question

apter 06 Homework x C Secure https://newconnect.mheducation.com/flow/connect.html hapter 06 Homework 8 Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows Sales (8e,00e units Cost of goods sol4 se per unst) Cont of goods manufactured (300,9 units9 per unit) Cest of good avaslable for sale Ending inventory (0,00 S30) Cost af goods seld Gress margis a Selling and administrative expenses consist of $350,000 in annual fwed expenses and $2 25 per unvt in variable selling and administrative expenses b. The company's product cost of $30 per unit is computed as follows Required: 1. Prepare an income statement for the company under variable costing

Explanation / Answer

Income Statement for the Company under Variable Costing

Particulars

Amount ($)

Sales revenue

$4000,000

Less: Variable cost of goods sold

Opening inventory

$ 0

Variable cost of goods manufactured

$2,100,000

Less: Closing Inventory(20,000 units*21 per unit)

($4,20,000)

($ 16,80,000)

$ 23,20,000

Less: Variable selling and administration expenses

($1,80,000)

Contribution

$21,40,000

Less: Fixed Cost(Production , selling and Administration)

(Working Note below)

($12,50,000)

Net Income

$ 8,90,000

Working Note:

Fixed Production overheads—(9/unit*80,000)----$ 9,00,000

Fixed Selling and Administration overheads--------$ 3,50,000

Total Fixed overheads------------------------------------$ 12,50,000