Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (19,200 x $68) $1,305,600 Manufacturing costs (19,200 units): Direct materials 787,200 Direct labor 186,240 Variable factory overhead 86,400 Fixed factory overhead 103,680 Fixed selling and administrative expenses 28,200 Variable selling and administrative expenses 34,100 The company is evaluating a proposal to manufacture 21,600 units instead of 19,200 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. Question Content Area a. 1. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 31 19,200 Units Manufactured 21,600 Units Manufactured $Sales $Sales Cost of goods sold: $Cost of goods manufactured $Cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total cost of goods sold $Total cost of goods sold $Gross profit $Gross profit Selling and administrative expenses Selling and administrative expenses $Operating income $Operating income Question Content Area a. 2. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Variable Costing Income StatementFor the Month Ending October 31 19,200 Units Manufactured 21,600 Units Manufactured $Sales $Sales Variable cost of goods sold: $Variable cost of goods manufactured $Variable cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total variable cost of goods sold $Total variable cost of goods sold $Manufacturing margin $Manufacturing margin Variable selling and administrative expenses Variable selling and administrative expenses $Contribution margin $Contribution margin Fixed costs: $Fixed factory overhead $Fixed factory overhead

Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (19,200 x $68) $1,305,600 Manufacturing costs (19,200 units): Direct materials 787,200 Direct labor 186,240 Variable factory overhead 86,400 Fixed factory overhead 103,680 Fixed selling and administrative expenses 28,200 Variable selling and administrative expenses 34,100 The company is evaluating a proposal to manufacture 21,600 units instead of 19,200 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. Question Content Area a. 1. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 31 19,200 Units Manufactured 21,600 Units Manufactured $Sales $Sales Cost of goods sold: $Cost of goods manufactured $Cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total cost of goods sold $Total cost of goods sold $Gross profit $Gross profit Selling and administrative expenses Selling and administrative expenses $Operating income $Operating income Question Content Area a. 2. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Variable Costing Income StatementFor the Month Ending October 31 19,200 Units Manufactured 21,600 Units Manufactured $Sales $Sales Variable cost of goods sold: $Variable cost of goods manufactured $Variable cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total variable cost of goods sold $Total variable cost of goods sold $Manufacturing margin $Manufacturing margin Variable selling and administrative expenses Variable selling and administrative expenses $Contribution margin $Contribution margin Fixed costs: $Fixed factory overhead $Fixed factory overhead

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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Question Content Area

a. 1. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.

Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 31

	19,200 Units Manufactured	21,600 Units Manufactured
	$Sales	$Sales
Cost of goods sold:
	$Cost of goods manufactured	$Cost of goods manufactured
	Inventory, October 31	Inventory, October 31
	$Total cost of goods sold	$Total cost of goods sold
	$Gross profit	$Gross profit
	Selling and administrative expenses	Selling and administrative expenses
	$Operating income	$Operating income

Question Content Area

a. 2. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.

Marshall Inc.Variable Costing Income StatementFor the Month Ending October 31

	19,200 Units Manufactured	21,600 Units Manufactured
	$Sales	$Sales
Variable cost of goods sold:
	$Variable cost of goods manufactured	$Variable cost of goods manufactured
	Inventory, October 31	Inventory, October 31
	$Total variable cost of goods sold	$Total variable cost of goods sold
	$Manufacturing margin	$Manufacturing margin
	Variable selling and administrative expenses	Variable selling and administrative expenses
	$Contribution margin	$Contribution margin
Fixed costs:
	$Fixed factory overhead	$Fixed factory overhead
	Fixed selling and administrative expenses	Fixed selling and administrative expenses
Total fixed costs	$fill in the blank 945e0209e004f85_28	$fill in the blank 945e0209e004f85_29
	$Operating income	$Operating income

a. 2. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the variable costing format.
If an amount box does not require an entry leave it blank.
Sales
Variable cost of goods sold:
Variable cost of goods manufactured
Inventory, October 31
Total variable cost of goods sold
Manufacturing margin
Variable selling and administrative expenses
Contribution margin
Fixed costs:
Marshall Inc.
Variable Costing Income Statement
For the Month Ending October 31
Fixed factory overhead
Fixed selling and administrative expenses
Total fixed costs
Operating income
19,200 Units Manufactured 21,600 Units Manufactured
000000

Sales
Cost of goods sold:
Cost of goods manufactured
Inventory, October 31
Total cost of goods sold
Marshall Inc.
Absorption Costing Income Statement
For the Month Ending October 31
Gross profit
Selling and administrative expenses
Operating income
19,200 Units Manufactured 21,600 Units Manufactured
100000
QO0OO0

Expert Solution

Step 1

Lets understand the basics.

There are two type of costing systems are followed which are,

(1) Variable costing

(2) Absorption costing

In variable costing, product cost is calculated by adding all the manufacturing variable cost into consideration.

In absorption costing, product cost is calculated by adding all manufacturing variable as well as fixed cost into consideration.

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Sales (19,200 x $68)	$1,305,600
Manufacturing costs (19,200 units):
Direct materials	787,200
Direct labor	186,240
Variable factory overhead	86,400
Fixed factory overhead	103,680
Fixed selling and administrative expenses	28,200
Variable selling and administrative expenses	34,100