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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:b. Prepare an income statement using variable costing.
Townsend Co.
Variable Costing Income Statement
For the Month Ended January 31
Sales
Variable cost of goods sold:
Manufacturing margin
$4
Variable selling and administrative expenses
Fixed costs:
Operating income
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
$45,500
a. Prepare an income statement using absorption costing.
Townsend Co.
Absorption Costing Income Statement
For the Month Ended January 31
Sales
Cost of goods sold:
Cost of goods manufactured
Selling and administrative expenses
Ending inventory
Gross profit
2$
Selling and administrative expenses
Operating income
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