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Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending January 31, Lemke Inc. estimated the following operating results: Sales (25,600 x $91) Manufacturing costs (25,600 units): Direct materials Direct labor Variable factory overhead $2,329,600 1,400,320 332,800 153,600

Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending January 31, Lemke Inc. estimated the following operating results: Sales (25,600 x $91) Manufacturing costs (25,600 units): Direct materials Direct labor Variable factory overhead $2,329,600 1,400,320 332,800 153,600

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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**Estimated Income Statements Using Absorption and Variable Costing** *Prior to the first month of operations ending January 31, Lemke Inc. estimated the following operating results:* - **Sales (25,600 x $91):** $2,329,600 **Manufacturing Costs (25,600 units):** - Direct materials: $1,400,320 - Direct labor: $332,800 - Variable factory overhead: $153,600 - Fixed factory overhead: $184,320 - Fixed selling and administrative expenses: $50,100 - Variable selling and administrative expenses: $60,600 *The company is evaluating a proposal to manufacture 28,800 units instead of 25,600 units, thus creating an ending inventory of 3,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.* **Instructions:** a. Prepare an estimated income statement, comparing operating results if 25,600 and 28,800 units are manufactured in the absorption costing format. If an amount box does not require an entry, leave it blank. b. Prepare an estimated income statement, comparing operating results if 25,600 and 28,800 units are manufactured in the variable costing format. If an amount box does not require an entry, leave it blank. --- **Lemke Inc.** **Variable Costing Income Statement for the Month Ending January 31:** | **Line Item Description** | **25,600 Units Manufactured** | **28,800 Units Manufactured** | |----------------------------------------|------------------------------|------------------------------| | | | |
Transcribed Image Text:**Estimated Income Statements Using Absorption and Variable Costing** *Prior to the first month of operations ending January 31, Lemke Inc. estimated the following operating results:* - **Sales (25,600 x $91):** $2,329,600 **Manufacturing Costs (25,600 units):** - Direct materials: $1,400,320 - Direct labor: $332,800 - Variable factory overhead: $153,600 - Fixed factory overhead: $184,320 - Fixed selling and administrative expenses: $50,100 - Variable selling and administrative expenses: $60,600 *The company is evaluating a proposal to manufacture 28,800 units instead of 25,600 units, thus creating an ending inventory of 3,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.* **Instructions:** a. Prepare an estimated income statement, comparing operating results if 25,600 and 28,800 units are manufactured in the absorption costing format. If an amount box does not require an entry, leave it blank. b. Prepare an estimated income statement, comparing operating results if 25,600 and 28,800 units are manufactured in the variable costing format. If an amount box does not require an entry, leave it blank. --- **Lemke Inc.** **Variable Costing Income Statement for the Month Ending January 31:** | **Line Item Description** | **25,600 Units Manufactured** | **28,800 Units Manufactured** | |----------------------------------------|------------------------------|------------------------------| | | | |
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