Absorption Costing Income Statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: Sales (420,000 units) Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 514 per unit) Less ending inventory (80,000 units x $14 per unit) Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and admini $7,000,000 1,120,000 $160,000 75.000 $7,450,000 5,680,000 $1,570,000 80,000 $1,490,000 235.000
Absorption Costing Income Statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: Sales (420,000 units) Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 514 per unit) Less ending inventory (80,000 units x $14 per unit) Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and admini $7,000,000 1,120,000 $160,000 75.000 $7,450,000 5,680,000 $1,570,000 80,000 $1,490,000 235.000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Absorption Costing Income Statement
On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept:
Sales (420,000 units)
Variable cost of goods sold:
Variable cost of goods manufactured (500,000 units x $14 per unit)
Less ending inventory (80,000 units x $14 per unit)
Variable cost of goods sold
Manufacturing margin
Variable selling and administrative expenses
Contribution margin
Fixed costs:
Fixed manufacturing costs
Fixed selling and administrative expenses
Income from operations
Cost of goods sold:
Income from operations
$7,000,000
1,120,000
$160,000
75,000
Variable costing income from operations
Absorption costing income from operations
Difference
$7,450,000
a. Prepare an absorption costing income statement. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.
Tudor Manufacturing Co.
Income Statement-Absorption Costing
For the Month Ended June 30
5,880,000
$1,570,000
80,000
$1,490,000
235,000
$1,255,000
b. Reconcile the variable costing income from operations of $1,255,000 with the absorption costing income from operations determined in (a).
Reconciliation of Variable and Absorption Costing
Income
Preciou
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