Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income Whitman Company Income Statement Direct materials Direct labor The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Variable manufacturing overhead Fixed manufacturing overhead ($306,000 + 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 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. Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income Whitman Company Income Statement Direct materials Direct labor The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Variable manufacturing overhead Fixed manufacturing overhead ($306,000 + 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 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. Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement
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 (39,000 units x $42.10 per unit)
Cost of goods sold (39,000 units x $23 per unit)
Gross margin
Selling and administrative expenses
Net operating income
The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable
expenses. The $23 unit product cost given above is computed as follows:
Direct materials.
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead ($306,000+ 51,000 units)
Absorption costing unit product cost
$ 1,641,900
897,000
744,900
448,500
$ 296,400
Required 1 Required 2
$10
4
3
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.
Redo the company's income statement in the contribution format using variable costing.
Whitman Company
Variable Costing Income Statement
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