kk.2 Whitman Company has just completed its first year of operations. Thecompany's absorption costing income statement for the year appears below:Whitman CompanyIncome StatementSales (38,000 units x $44.10 per unit) $1,675,800Cost of goods sold (38,000 units x$23 per unit)Gross marginSelling and administrative expensesNet operating incomeDirect materialsDirect laborAbsorption costing unit product costThe company's selling and administrative expenses consist of $285,000 peryear in fixed expenses and $5 per unit sold in variable expenses. The $23 perunit product cost given above is computed as follows:874,000801,800475,000$Variable manufacturing overheadFixed manufacturing overhead ($200,000 +50,000 units)Variable expenses:326,800Fixed expenses:Whitman CompanyVariable Costing Income StatementRequired:1. Prepare the company's income statement in the contribution format usingvariable costing.$11444$$2300Absorption costing net operating income (loss)002. Reconcile any difference between the net operating income on yourvariable costing income statement and the net operating income on theabsorption costing income statement.Reconciliation of Variable Costing and Absorption Costing NetOperating IncomesVariable costing net operating income (loss)$0

These are the two methods of costing system. Under absorption costing, variable costs as well as…

Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: Whitman Company Income Statement Sales (38,000 units X $44.10 per unit) $¹ Cost of goods sold (38,000 units x $23 per unit) Net operating income 1,675,800 Gross margin 801,800 Selling and administrative expenses 475,000 326,800 874,000 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $23 per unit product cost given above is computed as follows: Absorption costing unit product cost Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($200,000+ 50,000 units) $11 4 4 4 23 Required: 1. Prepare 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 appears below: Whitman Company Income Statement Sales (38,000 units X $44.10 per unit) $¹ Cost of goods sold (38,000 units x $23 per unit) Net operating income 1,675,800 Gross margin 801,800 Selling and administrative expenses 475,000 326,800 874,000 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $23 per unit product cost given above is computed as follows: Absorption costing unit product cost Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($200,000+ 50,000 units) $11 4 4 4 23 Required: 1. Prepare 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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