Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units x $42.10 per unit) Cost of goods sold (42,000 units x $21 per unit) Gross margin Selling and administrative expenses Net operating income i $ 1,768,200 882,000 886,200 483,000 $ 403,200 The company's selling and administrative expenses consist of $315.000 per year in fixed expenses and $4 per unit sold in variable expenses. The $21 unit product cost given above is computed as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($216,000 54,000 units) Absorption costing unit product cost $ 21 3 3 4 $ 21 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units x $42.10 per unit) Cost of goods sold (42,000 units x $21 per unit) Gross margin Selling and administrative expenses Net operating income i $ 1,768,200 882,000 886,200 483,000 $ 403,200 The company's selling and administrative expenses consist of $315.000 per year in fixed expenses and $4 per unit sold in variable expenses. The $21 unit product cost given above is computed as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($216,000 54,000 units) Absorption costing unit product cost $ 21 3 3 4 $ 21 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year
follows:
Whitman Company
Income Statement
Sales (42,000 units x $42.10 per unit)
Cost of goods sold (42,000 units x $21 per unit)
Gross margin
Selling and administrative expenses
Net operating income.
Direct materials
Direct labor
The company's selling and administrative expenses consist of $315.000 per year in fixed expenses and $4 per unit sold in variable
expenses. The $21 unit product cost given above is computed as follows:
$ 1,768, 200
882,000
886,200
483,000
$ 403,200
Variable manufacturing overhead
Fixed manufacturing overhead ($216,000 54,000 units)
Absorption costing unit pro
cost
$ 11
3
3
4
$21
Required:
1. Redo the company's income statement in the contribution format using variable costing.
2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating.
income on the absorption costing income statement above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe1e401b8-104e-4391-b90c-324f693d4c4c%2F332f2a21-1b60-4b9e-bdbe-afba8fee9604%2Fuvtfr4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year
follows:
Whitman Company
Income Statement
Sales (42,000 units x $42.10 per unit)
Cost of goods sold (42,000 units x $21 per unit)
Gross margin
Selling and administrative expenses
Net operating income.
Direct materials
Direct labor
The company's selling and administrative expenses consist of $315.000 per year in fixed expenses and $4 per unit sold in variable
expenses. The $21 unit product cost given above is computed as follows:
$ 1,768, 200
882,000
886,200
483,000
$ 403,200
Variable manufacturing overhead
Fixed manufacturing overhead ($216,000 54,000 units)
Absorption costing unit pro
cost
$ 11
3
3
4
$21
Required:
1. Redo the company's income statement in the contribution format using variable costing.
2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating.
income on the absorption costing income statement above
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