**Income Statements under Absorption Costing and Variable Costing**Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July:- **Sales (4,000 units):** $2,600,000- **Production costs (4,350 units):** - Direct materials: $1,218,000 - Direct labor: $522,000 - Variable factory overhead: $87,000 - Fixed factory overhead: $130,500 - **Total Production Costs:** $1,957,500- **Selling and administrative expenses:** - Variable: $60,000 - Fixed: $25,000 - **Total Selling and Administrative Expenses:** $85,000**a.** Prepare an income statement according to the absorption costing concept.**Gallatin County Motors Inc.***Absorption Costing Income Statement* *For the Month Ended July 31*- **Sales:** $2,600,000 - **Cost of Goods Sold:** $1,800,000 - **Gross Profit:** $800,000 This data outlines the key components of the first month's financial performance, using absorption costing to account for all manufacturing costs. ### Understanding Variable Costing in Income StatementsVariable costing is a managerial accounting concept that focuses on including only variable production costs in the cost of goods sold. Fixed costs are treated as period expenses and are not included in the cost of goods sold.Below is an example of an income statement prepared using the variable costing concept for Gallatin County Motors Inc. for the month ended July 31.#### Income Statement Example**Variable Factory Overhead**- Amount: $60,000**Operating Income**- Amount: $715,000---**Gallatin County Motors Inc.****Variable Costing Income Statement**For the Month Ended July 31- **Sales:** $2,600,000- **Direct Materials:** - (Enter the amount here if available) - **Other Variable Costs:** - (Enter various costs here if available)**Fixed Costs:**- List any fixed costs separatelyThis format helps better understand how costs behave and aids in internal decision-making processes. It focuses on cost analysis and profitability by examining how sales impact the bottom line after accounting for variable costs.

As per the absorption costing method, the product cost includes fixed and variable manufacturing…

Answered: Income Statements under Absorption…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (15,000 units) $1,800,000 Production costs (19,000 units): Direct materials $843,600 Direct labor 404,700 Variable factory overhead 203,300 Fixed factory overhead 134,900 1,586,500 Selling and administrative expenses: Variable selling and administrative expenses $245,900 Fixed selling and administrative expenses 95,200 341,100 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31
ome Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (14,500 units) $1,450,000 Production costs (19,000 units): Direct materials $703,000 Direct labor 338,200 Variable factory overhead 169,100 Fixed factory overhead 112,100 1,322,400 Selling and administrative expenses: Variable selling and administrative expenses $205,000 Fixed selling and administrative expenses 79,300 284,300 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales $ Cost of goods sold Gross profit $ Selling and administrative expenses…
Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (10,000 units) $1,500,000 Production costs (13,000 units): Direct materials $721,500 Direct labor 345,800 Variable factory overhead 172,900 Fixed factory overhead 115,700 1,355,900 Selling and administrative expenses: Variable selling and administrative expenses $210,200 Fixed selling and administrative expenses 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. b. Prepare an income statement according to the variable costing concept.
Munabhai
ncome Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (16,500 units) $2,145,000 Production costs (21,000 units): Direct materials $1,010,100 Direct labor 485,100 Variable factory overhead 241,500 Fixed factory overhead 161,700 1,898,400 Selling and administrative expenses: Variable selling and administrative expenses $294,300 Fixed selling and administrative expenses 113,900 408,200 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Cost of goods sold $ Cost of goods sold $ $ b. Prepare an…
Subject: accounting
Variable Costing Income Statement On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept: Joplin Company Absorption Costing Income Statement For the Month Ended April 30 Sales (5,600 units) Cost of goods sold: Cost of goods manufactured (6,600 units) Inventory, April 30 (900 units) Total cost of goods sold Gross profit Selling and administrative expenses Operating income Variable cost of goods sold: $138,600 (18,900) Fixed costs: $162,400 If the fixed manufacturing costs were $30,492 and the fixed selling and administrative expenses were $12,600, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. Joplin Company Variable Costing Income Statement For the Month Ended April 30 (119,700) $42,700 (25,720) $16,980
Provide table
Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (17,000 units) $2,210,000 Production costs (22,000 units): Direct materials $1,058,200 Direct labor 508,200 Variable factory overhead 253,000 Fixed factory overhead 169,400 1,988,800 Selling and administrative expenses: Variable selling and administrative expenses $308,300 Fixed selling and administrative expenses 119,300 427,600 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $fill in the blank 72b9f3f8dfebff0_2 fill in the blank…
Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (15,000 units) $2,100,000 Production costs (19,000 units): Direct materials $984,200 Direct labor 473,100 Variable factory overhead 235,600 Fixed factory overhead 157,700 1,850,600 Selling and administrative expenses: Variable selling and administrative expenses $286,800 Fixed selling and administrative expenses 111,000 397,800 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $ $ $ b. Prepare an income statement…
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (17,000 units) $2,040,000 Production costs (22,000 units): Direct materials $976,800 Direct labor 468,600 Variable factory overhead 235,400 Fixed factory overhead 156,200 1,837,000 Selling and administrative expenses: Variable selling and administrative expenses $284,700 Fixed selling and administrative expenses 110,200 394,900 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales $2,040000.00 Cost of goods sold fill in the blank Gross profit $620,500.00…
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (161,000 units) during the first month, creating an ending inventory of 20,000 units. During February, the company produced 141,000 units during the mont but sold 161,000 units at $520 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Total Cost Cost Manufacturing costs in February 1 beginning inventory: Variable 20,000 $260.00 $5,200,000 Fixed 20,000 40.00 800,000 Total $300.00 $6,000,000 Manufacturing costs in February: Variable Fixed Total 141,000 $260.00 $36,660,000 141,000 46.20 6,514,200 $306.20 $43,174,200 Selling and administrative expenses in February: Variable 161,000 $30.80 $4,958,800 Fixed 161,000 4.00 644,000 $34.80 $5,602,800 Total This information has been collected in the Microsoft Excel…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS