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 $43.60 per unit) Cost of goods sold (42,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income Direct materials Direct labor $ 1,831, 200 966,000 865,200 483,000 $ 382,200 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 $23 unit product cost given above is computed as follows: $ 10 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($276,000 46,000 units) 6 Absorption costing unit product cost $ 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 Required 2 Redo the company's income statement in the contribution format using variable costing Whian Company Variable Costing Income Statement Complete this question by entering your answers in the tabs below. Required 2 > Required 1 Required 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. (Enter any losses or deductions as a negative value) Reconciliation of Variable Coating and Absorption Costing Net Operating Incomes Variable conting net operating income Absorption costing net operating income Required 1
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 $43.60 per unit) Cost of goods sold (42,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income Direct materials Direct labor $ 1,831, 200 966,000 865,200 483,000 $ 382,200 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 $23 unit product cost given above is computed as follows: $ 10 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($276,000 46,000 units) 6 Absorption costing unit product cost $ 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 Required 2 Redo the company's income statement in the contribution format using variable costing Whian Company Variable Costing Income Statement Complete this question by entering your answers in the tabs below. Required 2 > Required 1 Required 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. (Enter any losses or deductions as a negative value) Reconciliation of Variable Coating and Absorption Costing Net Operating Incomes Variable conting net operating income Absorption costing net operating income Required 1
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 $43.60 per unit)
Cost of goods sold (42,000 units x $23 per unit)
Gross margin
Selling and administrative expenses
Net operating income
$ 1,831, 200
966,000
865,200
483,000
$ 382,200
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 $23 unit
product cost given above is computed as follows:
Direct materials.
Direct labor
$ 10
4
Variable manufacturing overhead
3
Fixed manufacturing overhead ($276,000 46,000 units) 6
Absorption costing unit product cost
$ 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
Redo the company's income statement in the contribution format using variable costing.
Whitman Company
Variable Costing Income Statement
Required 2
Complete this question by entering your answers in the tabs below.
Required 1 Required 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. (Enter any losses or deductions as a negative value.)
Required 2 >
Reconciliation of Variable Costing and Absorption Costing Net Operating In
Variable costing net operating income
Absorption costing net operating income
< Required 1
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