Required: 1. Prepare an income statement based on the absorption costing concept. 2. Prepare an income statement based on the variable costing concept. 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).
Required: 1. Prepare an income statement based on the absorption costing concept. 2. Prepare an income statement based on the variable costing concept. 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 38E: Total and Unit Product Cost Martinez Manufacturing Inc. showed the following costs for last month:...
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Question
During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 50,000 mini refrigerators, of which 44,000 were sold. Operating data for the month are summarized as follows:
1
|
Sales
|
|
$9,240,000.00
|
2
|
|
|
|
3
|
Direct materials
|
$3,500,000.00
|
|
4
|
Direct labor
|
1,200,000.00
|
|
5
|
Variable manufacturing cost
|
850,000.00
|
|
6
|
Fixed manufacturing cost
|
600,000.00
|
6,150,000.00
|
7
|
Selling and administrative expenses:
|
|
|
8
|
Variable
|
$572,000.00
|
|
9
|
Fixed
|
352,000.00
|
924,000.00
|
Required: | |
1. | Prepare an income statement based on the absorption costing concept. |
2. | Prepare an income statement based on the variable costing concept. |
3. | Explain the reason for the difference in the amount of operating income reported in (1) and (2). |
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