Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $850. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 250 Units sold 225 Units in ending inventory 25 Variable costs per unit: Direct materials $ 100 Direct labor $ 320 Variable manufacturing overhead $ 40 Variable selling and administrative $ 20 Fixed costs: Fixed manufacturing overhead $ 60,000 Fixed selling and administrative $ 20,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 191,250 Cost of goods sold 157,500 Gross margin 33,750 Selling and administrative expense 24,500 Net operating income $ 9,250 Required: Prepare an income statement for last year using variable costing.
Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $850. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 250 Units sold 225 Units in ending inventory 25 Variable costs per unit: Direct materials $ 100 Direct labor $ 320 Variable manufacturing overhead $ 40 Variable selling and administrative $ 20 Fixed costs: Fixed manufacturing overhead $ 60,000 Fixed selling and administrative $ 20,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 191,250 Cost of goods sold 157,500 Gross margin 33,750 Selling and administrative expense 24,500 Net operating income $ 9,250 Required: Prepare an income statement for last year using variable costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $850. Selected data for the company’s operations last year follow:
| Units in beginning inventory | 0 |
|---|---|
| Units produced | 250 |
| Units sold | 225 |
| Units in ending inventory | 25 |
| Variable costs per unit: | |
| Direct materials | $ 100 |
| Direct labor | $ 320 |
| Variable manufacturing |
$ 40 |
| Variable selling and administrative | $ 20 |
| Fixed costs: | |
| Fixed manufacturing overhead | $ 60,000 |
| Fixed selling and administrative | $ 20,000 |
The absorption costing income statement prepared by the company’s accountant for last year appears below:
| Sales | $ 191,250 |
|---|---|
| Cost of goods sold | 157,500 |
| Gross margin | 33,750 |
| Selling and administrative expense | 24,500 |
| Net operating income | $ 9,250 |
Required:
- Prepare an income statement for last year using variable costing.
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