ber 31, the end of the first month of operations, Carswell & Co. income statemen

Question

ber 31, the end of the first month of operations, Carswell & Co. income statement based on absorption costing prepared the following Carswell&Co; Income Statement For Month Ended October 31.20 Sales (2,600 units) Cost of goods sold: Cost of goods manufactured Less ending inventory (400 units) Cost of goods sold Gross profit Selling and administrative expenses Income from operations $104,000 $85,500 S 29,900 21.500 8,400 If the fixed manufacturing costs were $42,000 and the variable selling and admin encept. were S15,600, prepare an income statement in accordance ministrative expenses with the variable costing

Explanation / Answer

Particulars Amt Sales (2600 x 40) 104000 Less: Variable Manufacturing Cost 37700 Les: Variable admin expenses 15600 Contribution Margin 50700 Less: Fixed manufacturing expenses 42000 Less: Fixed admin expenses (21500-15600) 5900 Net Income 2800 Working Note Particulars Amt Cost of Goods Sold 74100 Less: Fixed Cost allocated (42000 / 3000) x 2600 36400 Variable Manufacturing Cost 37700

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