Question

The following information was collected for the first year of manufacturing for Appliance Apps: Direct Materials per Unit Direct Labor per Unit Variable Manufacturing Overhead per Unit Variable Selling and Administration Expenses Units Produced $1.50 40,000 Units Sold 35,000 $13 Sales Price Fixed Manufacturing Expenses $120,000 $21,000 Fixed Selling and Administration Expenses Prepare an income statement under variable costing method. Appliance Apps Income Statement Prepare a reconciliation to the income under the absorption method. Appliance Apps Reconciliation

Answer 1

Income statement under variable costing method

Income statens est Method: under Variable costing 4,55,000 Sales Less: Variable cost of Goods Sold :- lovestory-opening Variable cost of good cold 40.000 X (8.5+ las toas) Nil 1,60,000 1, 60,ooo Less: Closing lovestory Gross lootsibation Margisi Sooo X 4 C20,000) 1.40.000 3, 15,000 52,500 Less: Variable selling & Admn strales Cepenses Cootribution Margis 2.62.500 Less: Period Encpenses:- Ficced Moocfactcang espesses 2000 Fixed selling & Adonistration al.coo 1.41Doo erpenses Net Operating Iocome: 1.21.500

Reconciliation to the income under the absorption method

locome under the Reconciliation to the absorption Method:- Net operating to come Clos uodes variable costing Add: Ficced corpufacturing overhead deferred to lovestory: 15.000 5.000 X 3] Less: Foad modcfcofcering ovegbeod eleased from lovestory : Nie Net operating locome(loss under absorption costing: 1,36,500

working

Income strobosoust under Absorption Costings 4,55,000 Nil Sales Leas: Cost of Goods sold opessing lovestory Add: Coel of good cooctaetcred [40,000 x] Less. Closing lovestory 5000 x1 Gross Profit 2.80,000 2.80,000 (35.000) 2.45.000 2. 10,000 Less Selling Administrator Weapersas :- Feedl. 21.000 Vaziable 73,500 Het operating Income 1.36.500