1 Sales (32,000 units) 2 Production costs (41,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead 7 Selling and administrative expenses: 3 4 5 6 8 9 Variable selling and administrative expenses Fixed selling and administrative expenses $3,280,000.00 2,255,000.00 1,025,000.00 615,000.00 $1,180,000.00 210,000.00 $8,000,000.00 7,175,000.00 1,390,000.00 Required: a. Prepare an income statement according to the absorption costing concept. b. Prepare an income statement according to the variable costing concept. c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?
1 Sales (32,000 units) 2 Production costs (41,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead 7 Selling and administrative expenses: 3 4 5 6 8 9 Variable selling and administrative expenses Fixed selling and administrative expenses $3,280,000.00 2,255,000.00 1,025,000.00 615,000.00 $1,180,000.00 210,000.00 $8,000,000.00 7,175,000.00 1,390,000.00 Required: a. Prepare an income statement according to the absorption costing concept. b. Prepare an income statement according to the variable costing concept. c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
please answer do not image format
Transcribed Image Text:1 Sales (32,000 units)
2
Production costs (41,000 units):
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead
7 Selling and administrative expenses:
3
4
5
6
8
9
Variable selling and administrative expenses
Fixed selling and administrative expenses
$3,280,000.00
2,255,000.00
1,025,000.00
615,000.00
$1,180,000.00
210,000.00
$8,000,000.00
7,175,000.00
1,390,000.00
Required:
a. Prepare an income statement according to the absorption costing concept.
b. Prepare an income statement according to the variable costing concept.
c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education