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 the Month Ended October 31Sales (2,600 units) $117,000Cost of goods sold: Cost of goods manufactured $85,500 Ending inventory (400 units) (11,400) Total cost of goods sold (74,100)Gross profit $42,900Selling and administrative expenses (21,500)Operating income $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 the Month Ended October 31 $Variable cost of goods sold: $ $ $Fixed costs: $ Operating income $

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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 the Month Ended October 31
Sales (2,600 units)		$117,000
Cost of goods sold:
Cost of goods manufactured	$85,500
Ending inventory (400 units)	(11,400)
Total cost of goods sold		(74,100)
Gross profit		$42,900
Selling and administrative expenses		(21,500)
Operating income		$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 the Month Ended October 31
		$
Variable cost of goods sold:
	$


		$

		$
Fixed costs:
	$

Operating income		$

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