Michie Company's management accountant prepared the following income statement relating to its second year of operations using the absorption costing format: Michie Company Income Statement (Absorption Costing) Year Ended December 31, Year 2 Sales Cost of goods sold: Beginning inventory Variable and fixed manufacturing costs Cost of goods available for sale Less ending inventory Total cost of goods sold Gross margin Less operating costs: Variable selling and administrative costs Fixed selling and administrative costs Net income (50,000 x $ 20.00) (10,000 $ 10.00*) (45,000 x $ 10.00*) (55,000 $10.00) (5,000 * $ 10.00) $ 1,000,000 $ 100,000 450,000 550,000 50,000 (500,000) $ 500,000 (50,000 x $ 2.00) $ 100,000 150,000 Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00. (250,000) $ 250,000 * Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00. Required: Prepare an income statement for Michie Company under variable costing. Note: Amounts to be deducted should be indicated with a minus sign. Michie Company Income Statement (Variable Costing) Year Ended December 31, Year 2 Sales Less variable costs: Variable cost of goods sold: Cost of goods available for sale Total variable cost of goods sold Less fixed costs:
Michie Company's management accountant prepared the following income statement relating to its second year of operations using the absorption costing format: Michie Company Income Statement (Absorption Costing) Year Ended December 31, Year 2 Sales Cost of goods sold: Beginning inventory Variable and fixed manufacturing costs Cost of goods available for sale Less ending inventory Total cost of goods sold Gross margin Less operating costs: Variable selling and administrative costs Fixed selling and administrative costs Net income (50,000 x $ 20.00) (10,000 $ 10.00*) (45,000 x $ 10.00*) (55,000 $10.00) (5,000 * $ 10.00) $ 1,000,000 $ 100,000 450,000 550,000 50,000 (500,000) $ 500,000 (50,000 x $ 2.00) $ 100,000 150,000 Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00. (250,000) $ 250,000 * Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00. Required: Prepare an income statement for Michie Company under variable costing. Note: Amounts to be deducted should be indicated with a minus sign. Michie Company Income Statement (Variable Costing) Year Ended December 31, Year 2 Sales Less variable costs: Variable cost of goods sold: Cost of goods available for sale Total variable cost of goods sold Less fixed costs:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Michie Company's management accountant prepared the following income statement relating to its second year of operations using
the absorption costing format:
Michie Company
Income Statement (Absorption Costing)
Year Ended December 31, Year 2
Sales
Cost of goods sold:
Beginning inventory
Variable and fixed manufacturing costs
Cost of goods available for sale
Less ending inventory
Total cost of goods sold
Gross margin
Less operating costs:
Variable selling and administrative costs
Fixed selling and administrative costs
Net income
(50,000 x $ 20.00)
(10,000 $ 10.00*)
(45,000 x $ 10.00*)
(55,000 $10.00)
(5,000 * $ 10.00)
$ 1,000,000
$ 100,000
450,000
550,000
50,000
(500,000)
$ 500,000
(50,000 x $ 2.00)
$ 100,000
150,000
Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00.
(250,000)
$ 250,000
Transcribed Image Text:* Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00.
Required:
Prepare an income statement for Michie Company under variable costing.
Note: Amounts to be deducted should be indicated with a minus sign.
Michie Company
Income Statement (Variable Costing)
Year Ended December 31, Year 2
Sales
Less variable costs:
Variable cost of goods sold:
Cost of goods available for sale
Total variable cost of goods sold
Less fixed costs:
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