On October 31, the end of the first month of operations, Morristown & Co. prepared the following income statement based on absorption costing:Morristown & Co.Absorption Costing Income StatementFor Month Ended October 31, 20--Sales (2,600 units) $117,000Cost of goods sold: Cost of goods manufactured $85,500 Less ending inventory (400 units) 11,400 Cost of goods sold 74,100Gross profit $42,900Selling and administrative expenses 21,500Income from operations $21,400 If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable costing.Morristown & Co.Variable Costing Income StatementFor Month Ended October 31, 20-- Variable cost of goods sold:Fixed costs:Income from operations%24%24%24%24%24%24

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Answered: On October 31, the end of the first…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On October 31, the end of the first month of operations, Morristown & Co. prepared the following income statement based on absorption costing:

Morristown & Co.
Absorption Costing Income Statement
For Month Ended October 31, 20--
Sales (2,600 units)		$117,000
Cost of goods sold:
Cost of goods manufactured	$85,500
Less ending inventory (400 units)	11,400
Cost of goods sold		74,100
Gross profit		$42,900
Selling and administrative expenses		21,500
Income from operations		$21,400

If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable costing.

Morristown & Co.
Variable Costing Income Statement
For Month Ended October 31, 20--