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: Units Production 50,000 Sales ($18 per unit) (42,000) Inventory, January 31 ৪,000 Manufacturing costs: Variable $575,000 Fixed 80,000 Total $655,000 Selling and administrative expenses: Variable $35,000 Fixed 10,500 Total $45,500 a. Prepare an income statement using absorption costing.

FINANCIAL ACCOUNTING
10th Edition
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:
Units
Production
50,000
Sales ($18 per unit)
(42,000)
Inventory, January 31
8,000
Manufacturing costs:
Variable
$575,000
Fixed
80,000
Total
$655,000
Selling and administrative expenses:
Variable
$35,000
Fixed
10,500
Total
$45,500
a. Prepare an income statement using absorption costing.
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: Units Production 50,000 Sales ($18 per unit) (42,000) Inventory, January 31 8,000 Manufacturing costs: Variable $575,000 Fixed 80,000 Total $655,000 Selling and administrative expenses: Variable $35,000 Fixed 10,500 Total $45,500 a. Prepare an income statement using absorption costing.
b. Prepare an income statement using variable costing.
Townsend Co.
Variable Costing Income Statement
For the Month Ended January 31
Variable cost of goods sold:
Fixed costs:
Operating income.
%24
Transcribed Image Text:b. Prepare an income statement using variable costing. Townsend Co. Variable Costing Income Statement For the Month Ended January 31 Variable cost of goods sold: Fixed costs: Operating income. %24
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