Variable Costing Income Statement

During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. B. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?

Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.

Cost of Goods Manufactured, Income Statement W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for 400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips accounting records provide the following information: Required: 1. Prepare a statement of cost of goods manufactured. 2. Compute the average cost of producing one unit of product in the year. 3. Prepare an income statement for external users.

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 $18,840   Cost of goods sold $(16,010)   Selling, administrative, and other expenses (1,700)   Total expenses $(17,710)   Operating income $1,130   Assume that $4,140 million of cost of goods sold and $940 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $2,260 Ending inventory $2,640 Also, assume that 40% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Ansara Company.

Variable and Absorption Costing The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31: (in millions) $41,748 $(29,082) (8,113) $(37,195) Operating income $4,553 Assume that $10,575 million of cost of goods sold and $5,000 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Beginning inventory $11,266 11,402 Ending inventory Also, assume that 30% of the beginning and ending inventories were fixed costs. Sales Cost of goods sold Selling, administrative, and other expenses Total expenses a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million. Caterpillar Inc. Variable Costing Income Statement (assumed) For the Year Ended December 31 Line Item Description Sales Variable cost of goods sold: Beginning inventory Variable cost of goods manufactured Ending inventory Total…

Variable and Absorption Costing The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31:

Variable Costing Income Statement The following data were adapted from a recent income statement of The Procter & Gamble Company (PG):   (in millions) Sales $65,058    Operating costs:   Cost of products sold $(32,535)   Marketing, administrative, and other expenses (18,568)   Total operating costs $(51,103)   Operating income $13,955    Assume that the variable amount of each category of operating costs is as follows:   (in millions) Cost of products sold $19,500   Marketing, administrative, and other expenses 14,000   a. Based on the data given, prepare a variable costing income statement for Procter & Gamble, assuming that the company maintained constant inventory levels during the period. The Procter & Gamble Company Variable Costing Income Statement (assumed) (in millions) Sales      Variable cost of products sold                             Manufacturing margin      Variable marketing, administrative, and other expenses…

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