During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 60,000 mini refrigerators, of which 54,000 were sold. Operating data for the month are summarized as follows:1 Sales$10,260,000.002 Manufacturing costs:3Direct materials$5,100,000.00Direct labor1,800,000.00Variable manufacturing cost1,200,000.00Fixed manufacturing cost840,000.008,940,000.007 Selling and administrative expenses;Variable$972,000.009Fixed324,000.001,296,000.00Required:1. Prepare an income statement based on the absorption costing concept.*2. Prepare an income statement based on the variable costing concept.*3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).* Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answerchoices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is acalculation that results in a negative amount. For example: Net loss should be negative.8. LabelsAugust 31Cost of goods soldFixed costsFor the Month Ended August 31Variable cost of goods soldAmount DescriptionsContribution marginIContribution margin ratioCost of goods manufacturedFixed manufacturing costsFixed selling and administrative expensesGross profitOperating incomeInventory, August 31Loss from operationsManufacturing marginPlanned contribution marginSalesSales mixSelling and administrative expensesTotal cost of goods soldTotal fixed costsTotal variable cost of goods soldVariable cost of goods manufacturedVariable selling and administrative expenses

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Description: During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 60,000 mini refrigerators, of which 54,000 were sold. Operating data for the month are summarized as follows:1 Sales$10,260,000.002 Manufacturing costs:3D

In case of absorption costing, all manufacturing costs are considered as product costs that is both…

Business

Accounting

1. Prepare an income statement based on the absorption costing concept." 2. Prepare an income statement based on the variable costing concept." 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).

1. Prepare an income statement based on the absorption costing concept." 2. Prepare an income statement based on the variable costing concept." 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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