Estimated Income Statements, using Absorption and Variable CostingPrior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:Sales (28,000 x $98)$2,744,000 Manufacturing costs (28,000 units): Direct materials1,660,400 Direct labor392,000 Variable factory overhead184,800 Fixed factory overhead218,400 Fixed selling and administrative expenses59,400 Variable selling and administrative expenses71,900 The company is evaluating a proposal to manufacture 31,200 units instead of 28,000 units, thus creating an ending inventory of 3,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 28,000 and 31,200 units are manufactured in the absorption costing format. If anamount box does not reguire an entry leave it blank.Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 3128,000 Units Manufactured 31,200 Units ManufacturedSales v$ 2,744,000$ 2,744,000Cost of goods sold:Cost of goods manufactured v2,455,6002,690,160 XInventory, October 31 yTotal cost of goods sold v$2,455,600Gross profit V288,400 VSelling and administrative expenses v59,400Operating income y$ a. 2. Prepare an estimated income statement, comparing operating results if 28,000 and 31,200 units are manufactured in the variable costing format. If anamount box does not require an entry leave it blank.Marshall Inc.Variable Costing Income StatementFor the Month Ending October 3128,000 Units Manufactured31,200 Units ManufacturedVariable cost of goods manufactured X1,660,400 XVariable cost of goods sold:$$1$Fixed costs:Total fixed costs$$

Name: Estimated Income Statements, using Absorption and Variable CostingPrio
Uploaded: 2024-03-20T06:33:06.000Z
Channel: Bartleby
Description: Estimated Income Statements, using Absorption and Variable CostingPrior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:Sales (28,000 x $98)$2,744,000 Manufacturing costs (28,000 units): Dir

Absorption costing refers to the form of cost accounting that determines the value of inventory by capturing all the costs involved in the manufacturing a particular product such direct and indirect costs as well. Variable costing refers to the form of managerial accounting cost which determines the manufacturing overhead involves in the production of a period for that particular period of time. 1) Preparing the Income Statement A- Absorption Costing - Marshall Inc as follows: Income Statement A- Absorption Costing - Marshall Inc COGS For 28000 units Per unit cost For 31200 units Direct materials 1660400 59.3 1850160 Direct labor 392000 14 436800 Variable factory overhead 184800 184800 Fixed factory overhead 218400 218400 Total manufacturing costs 2455600 2690160 Units 28000 31200 Per unit cost 87.7 86.22307692 Income Statement Marshall Inc Particulars For 28000 units For 32000 units Sales 2744000 2744000 COGS Opening stock 0 0 Manufacturing costs 2455600 2690160 Closing stock 0 275904 2405200 Gross Margin 288400 329744 Operating expenses: Fixed selling and administrative 59400 59400 Variable selling and administrative 71900 71900 Total operating expense 131300 131300 Operating profit 157100 198444 b) Preparing the Income Statement A- Variable Costing - Marshall Inc as follows: Income Statement A- Variable Costing - Marshall Inc COGS For 28000 units Per unit cost For 31200 units Direct materials 1660400 59.3 1850160 Direct labor 392000 14 436800 Variable factory overhead 184800 184800 Fixed factory overhead 0 0 Total manufacturing costs 2237200 2471760 Units 28000 31200 Per unit cost 79.9 79.22307692 Income Statement Marshall Inc Particulars For 28000 units For 32000 units Sales 2744000 2744000 COGS Opening stock 0 0 Manufacturing costs 2237200 2471760 Closing stock 0 253504 Gross Margin 506800 525744 Variable selling and administrative 71900 71900 Contribution margin 434900 453844 Fixed costs Fixed factory overhead 218400 218400 Fixed selling and administrative 59400 59400 Total fixed costs 277800 277800 Operating profit 157100 176044

Answered: Estimated Income Statements, using…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Sales (28,000 x $98)	$2,744,000
Manufacturing costs (28,000 units):
Direct materials	1,660,400
Direct labor	392,000
Variable factory overhead	184,800
Fixed factory overhead	218,400
Fixed selling and administrative expenses	59,400
Variable selling and administrative expenses	71,900