On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January The following data summarized the results for January: Production Sales ($18 per unit) Inventory, January 31 Manufacturing costs: Variable Fixed Total Selling and administrative expenses: Variable Fixed Total Units 50,000 (42,000) 8,000 $575,000 80,000 $655,000 $35,000 10,500 $45,500 a. Prepare an income statement using absorption costing. Townsend Co. Absorption Costing Income Statement For the Month Ended January 31 Line Item Description Amount Amount

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January.
The following data summarized the results for January:
Production
Sales ($18 per unit)
Inventory, January 31
Manufacturing costs:
Variable
Fixed
Total
Selling and
administrative
expenses:
Variable
Fixed
Total
Cost of goods sold:
Units
50,000
(42,000)
8,000
Operating income
$575,000
80,000
$655,000
a. Prepare an income statement using absorption costing.
Townsend Co.
Absorption Costing Income Statement
For the Month Ended January 31
Line Item Description Amount Amount
$35,000
10,500
$45,500
Transcribed Image Text:On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January: Production Sales ($18 per unit) Inventory, January 31 Manufacturing costs: Variable Fixed Total Selling and administrative expenses: Variable Fixed Total Cost of goods sold: Units 50,000 (42,000) 8,000 Operating income $575,000 80,000 $655,000 a. Prepare an income statement using absorption costing. Townsend Co. Absorption Costing Income Statement For the Month Ended January 31 Line Item Description Amount Amount $35,000 10,500 $45,500
b. Prepare an income statement using variable costing.
Townsend Co.
Variable Costing Income Statement
For the Month Ended January 31
Line Item Description Amount Amount
Variable cost of goods sold:
Fixed costs:
Total fixed costs
Operating income
tA
tA
A
LA
Transcribed Image Text:b. Prepare an income statement using variable costing. Townsend Co. Variable Costing Income Statement For the Month Ended January 31 Line Item Description Amount Amount Variable cost of goods sold: Fixed costs: Total fixed costs Operating income tA tA A LA
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