Whitman Company has Just completed Its first year of operations. The company's absorptlon costing Income statement for the year follows: whitman Company Income statement Sales (41,00e units x $45.10 per unit) Cost of goods sold (41,000 units x $21 per unit) Gross margin selling and administrative expenses $1,849, 100 861, e00 988, 100 43е, see $ 557,600 Net operating income The company's selling and administrative expenses consist of $307,500 per year In fixed expenses and $3 per unit sold In varlable expenses. The $21 unit product cost given above Is computed as follows: Direct materials $ 11 Direct labor 4 variable manufacturing overhead Fixed manufacturing overhead ($200, e00 + 5e, 000 units) Absorption costing unit product cost $ 21 Requlred: 1. Redo the company's Income statement In the contributlon format using varlable costing. 2. Reconcile any difference between the net operating Income on your varlable costing Income statement and the net operating Income on the absorption costing Income statement above. Complete this question by entering vour answers in the tabs below.

Whitman Company has Just completed Its first year of operations. The company's absorptlon costing Income statement for the year follows: whitman Company Income statement Sales (41,00e units x $45.10 per unit) Cost of goods sold (41,000 units x $21 per unit) Gross margin selling and administrative expenses $1,849, 100 861, e00 988, 100 43е, see $ 557,600 Net operating income The company's selling and administrative expenses consist of $307,500 per year In fixed expenses and $3 per unit sold In varlable expenses. The $21 unit product cost given above Is computed as follows: Direct materials $ 11 Direct labor 4 variable manufacturing overhead Fixed manufacturing overhead ($200, e00 + 5e, 000 units) Absorption costing unit product cost $ 21 Requlred: 1. Redo the company's Income statement In the contributlon format using varlable costing. 2. Reconcile any difference between the net operating Income on your varlable costing Income statement and the net operating Income on the absorption costing Income statement above. Complete this question by entering vour answers in the tabs below.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Question

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 (41,00e units x $45.10 per unit)
Cost of goods sold (41,000 units x $21 per unit)
Gross margin
selling and administrative expenses
$1,849,100
861, e00
988,100
430,5ee
$ 557,600
Net operating income
The company's selling and administrative expenses consist of $307,500 per year In fixed expenses and $3 per unit sold in varlable
expenses. The $21 unit product cost given above Is computed as follows:
Direct materials
$ 11
Direct labor
4
Variable manufacturing overhead
Fixed manufacturing overhead ($200, 000 ÷ 50,000 units)
Absorption costing unit product cost
$ 21
Requlred:
1. Redo the company's Income statement In the contribution format using varlable costing.
2. Reconcile any difference between the net operating Income on your varlable 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
Variable Costing Income Statement

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 Costing and Absorption Costing Net Operating Incomes
Variable costing net operating income
Absorption costing net operating income

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