AJ Manufacturing Company incurred $55,000 of fixed product cost and $44,000 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,500 of fixed and $14,000 of variable selling and administrative costs. The company sold all of the units it produced for $180,000. Required a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP). b. Prepare an income statement using the contribution margin approach.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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AJ Manufacturing Company incurred $55,000 of fixed product cost and $44,000 of variable product cost during its first year of
operation. Also during its first year, AJ incurred $17,500 of fixed and $14,000 of variable selling and administrative costs. The company
sold all of the units it produced for $180,000.
Required
a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).
b. Prepare an income statement using the contribution margin approach.
Transcribed Image Text:AJ Manufacturing Company incurred $55,000 of fixed product cost and $44,000 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,500 of fixed and $14,000 of variable selling and administrative costs. The company sold all of the units it produced for $180,000. Required a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP). b. Prepare an income statement using the contribution margin approach.
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