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 $42.60 per unit) Cost of goods sold (42,000 units × $20 per unit) Gross margin Selling and administrative expenses Net operating income 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 $20 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($204,000 ÷ 51,000 units) Absorption costing unit product cost Whitman Company Variable Costing Income Statement 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. Sales Variable expenses: Variable cost of goods sold Variable selling and administrative $ 1,789, 200 Answer is not complete. Complete this question by entering your answers in the tabs below. Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expense Net operating income 840,000 949,200 483,000 $ 466,200 Required Required 1 2 Redo the company's income statement in the contribution format using variable costing. > 168,000 $ 10 3 3 4 204,000 315,000 $20 $ 1,789,200 168,000 1,621,200 519,000 $ 1.102.200
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 $42.60 per unit) Cost of goods sold (42,000 units × $20 per unit) Gross margin Selling and administrative expenses Net operating income 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 $20 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($204,000 ÷ 51,000 units) Absorption costing unit product cost Whitman Company Variable Costing Income Statement 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. Sales Variable expenses: Variable cost of goods sold Variable selling and administrative $ 1,789, 200 Answer is not complete. Complete this question by entering your answers in the tabs below. Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expense Net operating income 840,000 949,200 483,000 $ 466,200 Required Required 1 2 Redo the company's income statement in the contribution format using variable costing. > 168,000 $ 10 3 3 4 204,000 315,000 $20 $ 1,789,200 168,000 1,621,200 519,000 $ 1.102.200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $42.60 per unit)
Cost of goods sold (42,000 units × $20
per unit)
Gross margin
Selling and administrative expenses
Net operating income.
Direct materials
Direct labor
Variable manufacturing overhead
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 $20 unit product cost given above is computed as follows:
Fixed manufacturing overhead ($204,000 ÷
51,000 units)
Absorption costing unit product cost
Whitman Company
Variable Costing Income Statement
$
1,789, 200
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.
Sales
Variable expenses:
Variable cost of goods sold
Variable selling and
administrative
840,000
949,200
483,000
$ 466,200
X Answer is not complete.
Complete this question by entering your answers in the tabs below.
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative
expense
Net operating income
Required Required
1
2
Redo the company's income statement in the contribution format using variable costing.
168,000
$ 10
3
204,000
315,000
4
$ 20
$
1,789,200
168,000
1,621,200
519,000
$
1,102,200
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