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Variable and Absorption Costing The following data were adapted from a recent income statement of Ansara Company for the year ended December 31: (in millions) Sales $21,460 Cost of goods sold $(18,240) Selling, administrative, and other expenses (1,930) Total expenses $(20,170) Operating income $1,290 Assume that $4,680 million of cost of goods sold and $1,060 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $2,550 Ending inventory $2,980 Also, assume that 30% of the beginning and ending inventories were fixed costs. Prenare an in come statement according to the variable costing concent for Ansara Company Round numbers to n earest million

Variable and Absorption Costing The following data were adapted from a recent income statement of Ansara Company for the year ended December 31: (in millions) Sales $21,460 Cost of goods sold $(18,240) Selling, administrative, and other expenses (1,930) Total expenses $(20,170) Operating income $1,290 Assume that $4,680 million of cost of goods sold and $1,060 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $2,550 Ending inventory $2,980 Also, assume that 30% of the beginning and ending inventories were fixed costs. Prenare an in come statement according to the variable costing concent for Ansara Company Round numbers to n earest million

FINANCIAL ACCOUNTING
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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(8) Variable:

a. Prepare an income statement according to the variable costing concept for Ansara Company. Round numbers to nearest million. Ansara Company Variable Costing Income Statement (assumed) For the Year Ended December 31 Sales 21,460 Variable cost of goods sold: Beginning inventory 1,785 Variable cost of goods manufactured 13,861 Ending inventory -2,086 Total variable cost of goods sold 13,560 X Manufacturing margin 7,900 X Variable selling and administrative expenses 870 Contribution margin 7,030 X Fixed costs: Fixed manufacturing costs 4,680 ixed selling and administrative expenses 1,060 Total fixed costs 5,740 Operating income 1,290
Transcribed Image Text:a. Prepare an income statement according to the variable costing concept for Ansara Company. Round numbers to nearest million. Ansara Company Variable Costing Income Statement (assumed) For the Year Ended December 31 Sales 21,460 Variable cost of goods sold: Beginning inventory 1,785 Variable cost of goods manufactured 13,861 Ending inventory -2,086 Total variable cost of goods sold 13,560 X Manufacturing margin 7,900 X Variable selling and administrative expenses 870 Contribution margin 7,030 X Fixed costs: Fixed manufacturing costs 4,680 ixed selling and administrative expenses 1,060 Total fixed costs 5,740 Operating income 1,290
Variable and Absorption Costing The following data were adapted from a recent income statement of Ansara Company for the year ended December 31: (in millions) Sales $21,460 Cost of goods sold $(18,240) Selling, administrative, and other expenses (1,930) Total expenses $(20,170) Operating income $1,290 Assume that $4,680 million of cost of goods sold and $1,060 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $2,550 Ending inventory $2,980 Also, assume that 30% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Ansara Company. Round numbers to nearest million.
Transcribed Image Text:Variable and Absorption Costing The following data were adapted from a recent income statement of Ansara Company for the year ended December 31: (in millions) Sales $21,460 Cost of goods sold $(18,240) Selling, administrative, and other expenses (1,930) Total expenses $(20,170) Operating income $1,290 Assume that $4,680 million of cost of goods sold and $1,060 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $2,550 Ending inventory $2,980 Also, assume that 30% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Ansara Company. Round numbers to nearest million.
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Variable costing is a type and method of costing in which only variable costs are considered as product cost for the business.

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