Variable Costing Income Statement The following data were adapted from a recent income statement of The Bluth Company: Sales Operating costs: Cost of products sold Marketing, administrative, and other expenses Total operating costs Operating income (in millions) $162,030 Cost of products sold Marketing, administrative, and other expenses $(77,770) (51,850) $(129,620) $32,410 Assume that the variable amount of each category of operating costs is as follows: (in millions) $43,750 21,060 a. Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period.
Variable Costing Income Statement The following data were adapted from a recent income statement of The Bluth Company: Sales Operating costs: Cost of products sold Marketing, administrative, and other expenses Total operating costs Operating income (in millions) $162,030 Cost of products sold Marketing, administrative, and other expenses $(77,770) (51,850) $(129,620) $32,410 Assume that the variable amount of each category of operating costs is as follows: (in millions) $43,750 21,060 a. Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**Variable Costing Income Statement**
The following data were adapted from a recent income statement of The Bluth Company:
---
**(in millions)**
- **Sales**: $162,030
**Operating costs:**
- **Cost of products sold**: $(77,770)
- **Marketing, administrative, and other expenses**: $(51,850)
**Total operating costs**: $(129,620)
**Operating income**: $32,410
---
Assume that the variable amount of each category of operating costs is as follows:
**(in millions)**
- **Cost of products sold**: $43,750
- **Marketing, administrative, and other expenses**: $21,060
---
**Tasks:**
a. **Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period.**
The Bluth Company
Variable Costing Income Statement (assumed)
(in millions)
---
[Blank Income Statement Template with Dollar Amount Fields for Input]
- Fixed costs:
---
b. **If the Bluth company reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing?**
If the Bluth company reduced its inventories during the period, then the cost of products sold would [dropdown] fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the absorption costing income statement would be [dropdown], and the operating income would be [dropdown].](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8dbb38b-67db-4869-a2fb-b3f37c286b0c%2Fb00c4bd3-59fd-4270-aa72-692ad099c0d0%2Fpiabk4i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Variable Costing Income Statement**
The following data were adapted from a recent income statement of The Bluth Company:
---
**(in millions)**
- **Sales**: $162,030
**Operating costs:**
- **Cost of products sold**: $(77,770)
- **Marketing, administrative, and other expenses**: $(51,850)
**Total operating costs**: $(129,620)
**Operating income**: $32,410
---
Assume that the variable amount of each category of operating costs is as follows:
**(in millions)**
- **Cost of products sold**: $43,750
- **Marketing, administrative, and other expenses**: $21,060
---
**Tasks:**
a. **Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period.**
The Bluth Company
Variable Costing Income Statement (assumed)
(in millions)
---
[Blank Income Statement Template with Dollar Amount Fields for Input]
- Fixed costs:
---
b. **If the Bluth company reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing?**
If the Bluth company reduced its inventories during the period, then the cost of products sold would [dropdown] fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the absorption costing income statement would be [dropdown], and the operating income would be [dropdown].
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