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Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Textbook Question
Chapter 19, Problem 1R
The records of Anderjak Corporation contain the following information for the month of January:
The company has no beginning inventory.
REQUIREMENT
You have been asked to prepare a variable costing (direct costing) income statement and an absorption costing income statement for the month of January. Review the worksheet VARCOST that follows these requirements.
Expert Solution & Answer
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To determine
Prepare a income statement for january by using variable costing and absorption costing method.
Explanation of Solution
Prepare a income statement using absorption costing:
Income statement | ||
Absorption costing | ||
Particulars | Amount ($) | Amount ($) |
Sales | $ 2,400,000 | |
Cost of goods sold: | ||
Beginning inventory cost | $ 266,875 | |
Variable manufacturing costs | 980,000 | |
Fixed manufacturing costs | 315,000 | |
Total goods available for sale | $ 1,561,875 | |
Less: ending inventory | 91,875 | |
Cost of goods sold | 1,470,000 | |
Gross profit | $ 930,000 | |
Selling expenses: | ||
Fixed selling expenses | $ 100,000 | |
Variable selling expenses | 160,000 | |
Total selling expenses | 260,000 | |
Operating income | $ 670,000 |
Table (1)
Prepare a income statement using variable costing:
Income statement | ||
Variable costing | ||
Particulars | Amount ($) | Amount ($) |
Sales | $ 2,400,000 | |
Cost of goods sold: | ||
Beginning inventory cost | $ 210,000 | |
Variable manufacturing costs | 980,000 | |
Total goods available for sale | $ 1,190,000 | |
Less: ending inventory | 70,000 | |
Variable cost of goods sold | 1,120,000 | |
Manufacturing margin | $ 1,280,000 | |
Variable selling expenses | 160,000 | |
Contribution margin | $ 1,120,000 | |
Fixed costs: | ||
Fixed manufacturing costs | $ 315,000 | |
Fixed selling expenses | 100,000 | |
Total fixed costs | $ 415,000 | |
Operating income | $ 705,000 |
Table (2)
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Chapter 19 Solutions
Excel Applications for Accounting Principles
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