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: 1Sales $9,240,000.002Manufacturing costs: 3Direct materials$3,500,000.00 4Direct labor1,200,000.00 5Variable manufacturing cost850,000.00 6Fixed manufacturing cost600,000.006,150,000.007Selling and administrative expenses: 8Variable$572,000.00 9Fixed352,000.00924,000.00 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).

Absorption costing refers to a method of costing to account for all the costs of manufacturing. The…

Answered: Required: 1. Prepare an income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

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	Manufacturing costs:
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).