EX 19-28 Absorption costing income statement On June 30, 2016, the end of the fi
ID: 2478016 • Letter: E
Question
EX 19-28 Absorption costing income statement 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: Sales (420,000 units)…………… $7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x $14 per unit)… $7,000,000 Less ending inventory (80,000 units x $14 per unit)……… 1,120,000 Variable cost of goods sold…….. 5,880,000 Manufacturing margin…….. $1,570,000 Variable selling and administrative expenses……. 80,000 Contribution margin………….. $1,490,000 Fixed costs: Fixed manufacturing costs….. $160,000 Fixed selling and administrative expenses……. 75,000 235,000 Income from operations……. $1,255,000 A. Prepare an absorption costing income statement. B. Reconcile the variable costing income from operations of $1,255,000 with the absorption costing income from operations determined in (a).
Explanation / Answer
Unit product cost = Variable cost of goods manufactured per unit + (Fixed manufacturing /number of units produced)
= 14 + (160,000 / 500,000)
= 14 +.32
= 14.32 per unit
Absorption costing :
b)Net income as per variable costing 1255000
Add:Unit fixed manufacturing cost deferred
in ending inventory (25600) [80000*.32]
net income as per absorption costing 1280600
sales 7450000 less:cost of goods (420,000 * 14.32 ) (6014400) Gross margin 1435600 less: Variable selling (80000) Fixed selling (75000) net income 1280600Related Questions
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