Review the income statements on the Absorption Statement and Variable Statement panels, then complete the following table. The company’s sales price per unit is $75.00, and the number of units in ending inventory is 5,000. Item Amount Number of units sold Variable sales and administrative cost per unit Number of units manufactured Variable cost of goods manufactured per unit Fixed manufacturing cost per unit Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 1 Sales $1,125,000.00 2 Cost of goods sold: 3 Beginning inventory $0.00 4 Cost of goods manufactured 840,000.00 5 Ending inventory (210,000.00) 6 Total cost of goods sold 630,000.00 7 Gross profit $495,000.00 8 Selling and administrative expenses 275,000.00 9 Income from operations $220,000.00 Saxon, Inc. Variable Costing Income Statement For the Year Ended December 31 1 Sales $1,125,000.00 2 Variable cost of goods sold: 3 Beginning inventory $0.00 4 Variable cost of goods manufactured 600,000.00 5 Ending inventory (150,000.00) 6 Total variable cost of goods sold 450,000.00 7 Manufacturing margin $675,000.00 8 Variable selling and administrative expenses 210,000.00 9 Contribution margin $465,000.00 10 Fixed costs: 11 Fixed manufacturing costs $240,000.00 12 Fixed selling and administrative expenses 65,000.00 13 Total fixed costs 305,000.00 14 Income from operations $160,000.00

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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Review the income statements on the Absorption Statement and Variable Statement panels, then complete the following table. The company’s sales price per unit is $75.00, and the number of units in ending inventory is 5,000.

Item	Amount
Number of units sold
Variable sales and administrative cost per unit
Number of units manufactured
Variable cost of goods manufactured per unit
Fixed manufacturing cost per unit

Saxon, Inc.

Absorption Costing Income Statement

For the Year Ended December 31

1	Sales		$1,125,000.00
2	Cost of goods sold:
3	Beginning inventory	$0.00
4	Cost of goods manufactured	840,000.00
5	Ending inventory	(210,000.00)
6	Total cost of goods sold		630,000.00
7	Gross profit		$495,000.00
8	Selling and administrative expenses		275,000.00
9	Income from operations		$220,000.00

Saxon, Inc.

Variable Costing Income Statement

For the Year Ended December 31

1	Sales		$1,125,000.00
2	Variable cost of goods sold:
3	Beginning inventory	$0.00
4	Variable cost of goods manufactured	600,000.00
5	Ending inventory	(150,000.00)
6	Total variable cost of goods sold		450,000.00
7	Manufacturing margin		$675,000.00
8	Variable selling and administrative expenses		210,000.00
9	Contribution margin		$465,000.00
10	Fixed costs:
11	Fixed manufacturing costs	$240,000.00
12	Fixed selling and administrative expenses	65,000.00
13	Total fixed costs		305,000.00
14	Income from operations		$160,000.00

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