Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (84,000 units) during the first month, creating an ending inventory of 7,000 units. During June, the company produced 76,600 garments during the month but sold 83,600 units at $106 per unit. The June manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost Manufacturing costs in June 1 beginning inventory: Variable 7,000 $50 $ 350,000 Fixed 7,000 10 70,000 Total $60 $420,000 Manufacturing costs in June: Variable 76,600 $50 $ 3,830,000 Fixed 76,600 12 919,200 Total $62 $4,749,200 Selling and administrative expenses in June: Variable 83,600 $18 $ 1,504,800 Fixed 83,600 6 501,600 Total $24 $2,006,400 Required: a. Prepare an income statement according to the absorption costing concept for June.* b. Prepare an income statement according to the variable costing concept for June.* c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? * Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (84,000 units) during the first month, creating an ending inventory of 7,000 units. During June, the company produced 76,600 garments during the month but sold 83,600 units at $106 per unit. The June manufacturing costs and selling and administrative expenses were as follows:

	Number of Units	Unit Cost	Total Cost
Manufacturing costs in June 1 beginning inventory:
Variable	7,000	$50	$ 350,000
Fixed	7,000	10	70,000
Total	$60	$420,000
Manufacturing costs in June:
Variable	76,600	$50	$ 3,830,000
Fixed	76,600	12	919,200
Total	$62	$4,749,200
Selling and administrative expenses in June:
Variable	83,600	$18	$ 1,504,800
Fixed	83,600	6	501,600
Total		$24	$2,006,400

Required:

Prepare an income statement according to the absorption costing concept for June.*

Prepare an income statement according to the variable costing concept for June.*

What is the reason for the difference in the amount of income from operations reported in (a) and (b)?

* Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

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