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 (41,000 units x $42.60 per unit) cost of goods sold (41,000 units $23 per unit) Gross margin selling and administrative expenses Net operating income Direct materials Direct labor The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $3 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: $ 1,746,600 943,000 803,600 430,500 $ 373,100 Variable manufacturing overhead Fixed manufacturing overhead ($324,000+ 54,000 units) Absorption costing unit product cost $ 11 4 2 6 $.23 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing.

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 (41,000 units x $42.60 per unit) cost of goods sold (41,000 units $23 per unit) Gross margin selling and administrative expenses Net operating income Direct materials Direct labor The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $3 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: $ 1,746,600 943,000 803,600 430,500 $ 373,100 Variable manufacturing overhead Fixed manufacturing overhead ($324,000+ 54,000 units) Absorption costing unit product cost $ 11 4 2 6 $.23 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing.

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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