Exercise 11-13 Prepare an income statem \"sing the contribution margin approach

Question

Exercise 11-13 Prepare an income statem "sing the contribution margin approach LO 11.3 ost and $40,000 of varlable product cost during its first year of operation. Also during its first year, AJ incurred $16,000 of fixed selling and administrative costs and $13,000 of variable selling and administrative costs. The company sold all of the units it produced for $160,000. Required a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP). AJ MANUFACTURING COMPANY Income S

Explanation / Answer

Income Statement:

$ Sales 160000 Less: Variable costs: Variable product cost -40000 Variable selling and admin cost -13000 Contribution 107000 Less: Fixed costs: Fixed product cost -50000 Fixed selling and admin costs -16000 Net Income 41000

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