Variable and Absorption Costing-Service Company Tech Helpers Company prepares a

Question

Variable and Absorption Costing-Service Company Tech Helpers Company prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Tech Helpers provides a personal computer maintenance service that is sold for $100. The variable and fixed cost data are as follows: Direct labor $25.00 Variable cost per unit Fixed cost Marketing, general and administrative Variable cost (per service contract completed) Fixed cost (per month) $5.00 240,000 $5.00 $20,000 During 2015, 4,000 service contracts were started and 5,000 service contracts were completed. At the beginning of 2016, Tech Helpers had 1,000 service contracts in process at a per-unit cost of $90 in beginning work-in-process inventory.

Explanation / Answer

a. Tech Helpers Company

Absorption Costing Income Statement

For the year ended December 31, 2015

b. Tech Helpers Company

Variable Costing Income Statement

For the year ended. December 31, 2015

$ $ Sales 500,000 Cost of Goods Sold Beginning Inventory ( 2,000 x $ 57) 114,000 Variable Costs ( 4,000 x $ 30) 120,000 Fixed Costs 240,000 Ending Inventory (90,000) 384,000 Gross Profit 116,000 Less: Marketing, General and Administrative Variable 25,000 Fixed 20,000 45,000 Net Income 71,000

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.