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Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results March: Sales (10,000 units) Production costs (13,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $1,500,000 $721,500 345,800 172,900 115,700 1,355,900 $210,200 81,400 291,600 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income Statement For the Month Ended March 31 Line Item Description Amount

Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results March: Sales (10,000 units) Production costs (13,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $1,500,000 $721,500 345,800 172,900 115,700 1,355,900 $210,200 81,400 291,600 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income Statement For the Month Ended March 31 Line Item Description Amount

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (10,000 units) Production costs (13,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses For the Month Ended March 31 Line Item Description Amount $1,500,000 $721,500 345,800 172,900 115,700 1,355,900 $210,200 81,400 291,600 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income Statement
Transcribed Image Text:Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (10,000 units) Production costs (13,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses For the Month Ended March 31 Line Item Description Amount $1,500,000 $721,500 345,800 172,900 115,700 1,355,900 $210,200 81,400 291,600 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income Statement
Crazy Mountain Sports Inc. Absorption Costing Income Statement For the Month Ended March 31 Line Item Description Amount ✓ Cost of goods sold Gross profit Sales Selling and administrative expenses Variable factory overhead b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. ) Variable Costing Income Statement For the Month Ended March 31 Line Item Description Fixed costs: Amount Amount 8 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description 8 Fixed costs: Amount Amount 8 c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the in the per absorption costing variable casting method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under d, regardless of the amount of inventory change. Thus, when inventory increases, the all of the fixed manufacturing cost is deducted income statement will have a higher operating income.
Transcribed Image Text:Crazy Mountain Sports Inc. Absorption Costing Income Statement For the Month Ended March 31 Line Item Description Amount ✓ Cost of goods sold Gross profit Sales Selling and administrative expenses Variable factory overhead b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. ) Variable Costing Income Statement For the Month Ended March 31 Line Item Description Fixed costs: Amount Amount 8 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description 8 Fixed costs: Amount Amount 8 c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the in the per absorption costing variable casting method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under d, regardless of the amount of inventory change. Thus, when inventory increases, the all of the fixed manufacturing cost is deducted income statement will have a higher operating income.
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