Q2: The variable costing income statement for Gaza Company is seen below: Sales (6,000 units × $35) $210,000 Variable expenses: Beginning inventory (680 units × $20) $13,600 Variable cost of goods manufactured (6,400 units × $20) 128,000 Available for sale 141,600 Less: Ending inventory (1,080 units × $20) 21,600 Variable manufacturing cost of goods sold 120,000 Variable selling and administrative expenses 24,000 Contribution margin 66,000 Fixed expenses: Fixed factory overhead 20,000 Fixed selling and administrative expenses 15,300 Operating income $30,700 Required: Prepare an absorption-costing income statement for the same period of time. Assume that actual fixed costs were equal to budgeted fixed costs and the budgeted fixed overhead rate was constant over the period examined. Assume the production volume variance equals zero.
Q2: The variable costing income statement for Gaza Company is seen below:
Sales (6,000 units × $35) $210,000
Variable expenses:
Beginning inventory (680 units × $20) $13,600
Variable cost of goods manufactured
(6,400 units × $20) 128,000
Available for sale 141,600
Less: Ending inventory (1,080 units × $20) 21,600
Variable
Variable selling and administrative expenses 24,000
Contribution margin 66,000
Fixed expenses:
Fixed factory
Fixed selling and administrative expenses 15,300
Operating income $30,700
Required:
Prepare an absorption-costing income statement for the same period of time. Assume that actual fixed costs were equal to budgeted fixed costs and the budgeted fixed overhead rate was constant over the period examined. Assume the production volume variance equals zero.
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