10.00 points Sims Company, a manufacturer of tablet computers, began operations

Question

10.00 points Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and sales information for this year follows Manufacturing costs Direct materials Direct labor Overhead costs for the year 40 per unit 60 per unit Variable overhead $ 3,000,000 $7,000,000 Fixed overhead Selling and administrative costs for the year Variable Fixed $ 770,000 $4.250,000 Production and sales for the year Units produced Units sold 100,000 units 70,000 units 350 per unit Sales price per unit S 1. Prepare an income statement for the year using variable costing Variable Costing Income Statement Sales Less: Variable costs Direct materials Direct labor Variable overhead costs Variable selling and administrative expenses Total variable costs Contribution margin 770,000 770,000 14,630,000 xed overhead costs xed selling and administrative costs 4,250,000 11,250,000 Total fixed expenses Net income (loss) 2. Prepare an income statement for the year using absorption costing SIMS COMPANY

Explanation / Answer

1. SIMS Company

Variable Costing Income Statement

2. SIMS Company

Absorption Costing Income Statement

3. Production equals sales and there is no beginning finished goods inventory.

$ $ Sales 24,500,000 Less : Variable Cost of Goods Sold Direct Materials 4,000,000 Direct Labor 6,000,000 Variable Manufacturing Overhead 3,000,000 Cost of Goods Available for Sale 13,000,000 Less: Ending Inventory 3,900,000 9,100,000 Variable Selling and Administrative Expenses 770,000 Total Variable Costs 9,870,000 Contribution Margin 14,630,000 Fixed Costs Manufacturing 7,000,000 Selling and Administrative 4,250,000 Total Fixed Costs 11,250,000 Net Operating Income ( loss) 3,380,000

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