Whitman Company has just completed its first year of operations. The company’s a

Question

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:

The company’s selling and administrative expenses consist of $300,000 per year in fixed expenses and $3 per unit sold in variable expenses. The $22 per unit product cost given above is computed as follows:

Prepare the company’s income statement in the contribution format using variable costing.

Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement.

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations 1) Paticulars Amount Sales             1,644,000.00 Less Variable Expenses = 40,000 * (12 + 3 + 2 + 3)               (800,000.00) Contribution Margin                 844,000.00 Fixed cost = 300,000 + 265,000               (565,000.00) Net operating income                 279,000.00 2) Net operating income as per absorption costing                 344,000.00 Net operating income as per variable costing                 279,000.00 Difference between Income                   65,000.00 This difference is due to Fixed manufacturing overhead in ending inventory = 13,000 * 5                   65,000.00

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