prepare an income statement for the past year in the variable cost format. use t
ID: 2607681 • Letter: P
Question
prepare an income statement for the past year in the variable cost format. use the following headingPR 6-5B Variable costing income statement and effect on income of change in operations Obj. 4 v3. Income from Kimbrell Inc. manufactures three sizes of utility tables -small (S), medium (M, and lge (L) operations, $106,820 The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (I) continue Size M, (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used. XCEL TEMPLATE Continued)
Explanation / Answer
Income statement Particulars S M L Total Sales 9,90,000 10,87,500 9,45,000 30,22,500 Minus: Variable costs 6,56,600 8,27,250 6,52,050 21,35,900 Contribution margin 3,33,400 2,60,250 2,92,950 8,86,600 Minus: Fixed costs 2,73,125 3,30,525 2,64,250 8,67,900 Net operating income 60,275 (70,275) 28,700 18,700 workings Particulars S M L Total Variable costs cost of goods sold 5,38,500 7,18,500 5,67,000 18,24,000 operating expenses 1,18,100 1,08,750 85,050 3,11,900 Total variable costs 6,56,600 8,27,250 6,52,050 21,35,900 Fixed costs cost of goods sold 2,41,000 2,88,000 2,50,000 7,79,000 operating expenses 32,125 42,525 14,250 88,900 Total fixed costs 2,73,125 3,30,525 2,64,250 8,67,900
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