Prepare the income statement for the year ended 31 December 2020 using: Absorption costing Variable costing

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Prepare the income statement for the year ended 31 December 2020 using:

  • Absorption costing
  • Variable costing
Additional information regarding the costs of the company are given:
Manufacturing costs
Variable cost per unit
Budgeted fixed manufacturing overhead per year $32,400,000
$25
Selling and administrative costs
Variable cost per unit
Total fixed cost
$5
$5,000,000
Actual production in 2020
Actual Sales in 2020
7,600,000 units
7,000,000 units
$50 per unit
$32,000,000
Selling price
Actual fixed manufacturing overhead in 2020
The practical capacity level is used to calculate the budgeted fixed manufacturing cost
per unit. There are no variable cost variances. Fixed manufacturing overhead cost
variances are written off to cost of goods sold in the period in which they occur. There
has been no beginning inventory in 2020.
Transcribed Image Text:Additional information regarding the costs of the company are given: Manufacturing costs Variable cost per unit Budgeted fixed manufacturing overhead per year $32,400,000 $25 Selling and administrative costs Variable cost per unit Total fixed cost $5 $5,000,000 Actual production in 2020 Actual Sales in 2020 7,600,000 units 7,000,000 units $50 per unit $32,000,000 Selling price Actual fixed manufacturing overhead in 2020 The practical capacity level is used to calculate the budgeted fixed manufacturing cost per unit. There are no variable cost variances. Fixed manufacturing overhead cost variances are written off to cost of goods sold in the period in which they occur. There has been no beginning inventory in 2020.
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