On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept: Weatherford Company Absorption Costing Income Statement For the Month Ended November 30 1 Sales (28,000 units) $3,360,000.00 2 Cost of goods sold: 3 Cost of goods manufactured (31,600 units) $2,844,000.00 4 Inventory, November 30 (3,600 units) (324,000.00) 5 Total cost of goods sold 2,520,000.00 6 Gross profit $840,000.00 7 Selling and administrative expenses 160,000.00 8 Income from operations $680,000.00 If the fixed manufacturing costs were $284,400 and the fixed selling and administrative expenses were $140,000, prepare an income statement according to the variable costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter all amounts as positive numbers. Round your cost per unit answer to two decimal places and final answers to nearest whole dollar.
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.
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Weatherford Company
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Absorption Costing Income Statement
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For the Month Ended November 30
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1
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Sales (28,000 units)
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$3,360,000.00
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2
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Cost of goods sold:
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3
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Cost of goods manufactured (31,600 units)
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$2,844,000.00
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4
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Inventory, November 30 (3,600 units)
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(324,000.00)
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5
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Total cost of goods sold
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2,520,000.00
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6
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Gross profit
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$840,000.00
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7
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Selling and administrative expenses
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160,000.00
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8
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Income from operations
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$680,000.00
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