Variable Costing Income Statement The following data were adapted from a recent
ID: 2484058 • Letter: V
Question
Variable Costing Income Statement
The following data were adapted from a recent income statement of Bluth Company:
Assume that the variable amount of each category of operating costs is as follows:
Based on the above data, prepare a variable costing income statement for Bluth Company, assuming that the company maintained constant inventory levels during the period.
Bluth Company
Variable Costing Income Statement
(in millions)
$
$
$
Fixed costs:
$
Income from operations
$
(in millions) Net sales $168,720 Operating costs: Cost of products sold $80,990 Marketing, administrative, and other expenses 53,990 Total operating costs $134,980 Income from operations $33,740Explanation / Answer
Solution:
Bluth Company
Variable Costing Income Statement
(in millions)
Net Sales
$168,720
Variable Costs:
Cost of products sold
$45,550
Marketing, administrative, and other expenses
$21,930
Total Variable Cost
$67,480
Contribution Margin
(Sales - Variable Cost)
$101,240
Fixed Costs:
Cost of products sold
$35,440
Marketing, administrative, and other expenses
$32,060
Total Fixed Costs
$67,500
Income from operations
(Contribution Margin - Total Fixed Costs)
$33,740
Note:
Fixed Cost = Total Cost - Variable Cost
Fixed Cost - Cost of products sold = $80,990 - $45,550 = $35,440
Fixed Cost - Marketing, administrative, and other expenses = $53,990 - 21,930 = $32,060
Bluth Company
Variable Costing Income Statement
(in millions)
Net Sales
$168,720
Variable Costs:
Cost of products sold
$45,550
Marketing, administrative, and other expenses
$21,930
Total Variable Cost
$67,480
Contribution Margin
(Sales - Variable Cost)
$101,240
Fixed Costs:
Cost of products sold
$35,440
Marketing, administrative, and other expenses
$32,060
Total Fixed Costs
$67,500
Income from operations
(Contribution Margin - Total Fixed Costs)
$33,740
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