On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: Tudor Manufacturing Co. Income Statement - Variable Costing For the Month Ended June 30 1 Sales (420,000 units) $8,290,000.00 2 Variable cost of goods sold: 3 Variable cost of goods manufactured (490,000 units × $16 per unit) $7,840,000.00 4 Less ending inventory (70,000 units × $16 per unit) 1,120,000.00 5 Variable cost of goods sold 6,720,000.00 6 Manufacturing margin $1,570,000.00 7 Variable selling and administrative expenses 82,000.00 8 Contribution margin $1,488,000.00 9 Fixed costs: 10 Fixed manufacturing costs $137,200.00 11 Fixed selling and administrative expenses 74,000.00 211,200.00 12 Income from operations $1,276,800.00 Required: a. Prepare an absorption costing income statement. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. “Less” or “Plus” and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar. b. Reconcile the variable costing income from operations of $1,276,800 with the absorption costing income from operations determined in (a). Be sure to complete the statement heading. Enter all amounts as positive numbers.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept:
Tudor Manufacturing Co.
|
Income Statement - Variable Costing
|
For the Month Ended June 30
|
1
|
Sales (420,000 units)
|
|
$8,290,000.00
|
2
|
Variable cost of goods sold:
|
|
|
3
|
Variable cost of goods manufactured (490,000 units × $16 per unit)
|
$7,840,000.00
|
|
4
|
Less ending inventory (70,000 units × $16 per unit)
|
1,120,000.00
|
|
5
|
Variable cost of goods sold
|
|
6,720,000.00
|
6
|
Manufacturing margin
|
|
$1,570,000.00
|
7
|
Variable selling and administrative expenses
|
|
82,000.00
|
8
|
Contribution margin
|
|
$1,488,000.00
|
9
|
Fixed costs:
|
|
|
10
|
Fixed
|
$137,200.00
|
|
11
|
Fixed selling and administrative expenses
|
74,000.00
|
211,200.00
|
12
|
Income from operations
|
|
$1,276,800.00
|
Required: | |
a. | Prepare an absorption costing income statement. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. “Less” or “Plus” and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar. |
b. | Reconcile the variable costing income from operations of $1,276,800 with the absorption costing income from operations determined in (a). Be sure to complete the statement heading. Enter all amounts as positive numbers. |
Labels | |
Cost of goods sold | |
For the Month Ended June 30 | |
For the Year Ended June 30 | |
Amount Descriptions | |
Contribution margin | |
Cost of goods manufactured | |
Ending inventory | |
Gross profit | |
Income from operations | |
Manufacturing margin | |
Sales | |
Selling and administrative expenses | |
Variable cost of goods sold |
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