Question

Exercise 11-13 Prepare an income statement using the contribution margin approach LO 11-3 AJ Manufacturing Company incurred $53,500 of fixed product cost and $42,800 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,050 of fixed and $13,700 of variable selling and administrative costs. The company sold all of the units it produced for $174,000. Required a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP). AJ MANUFACTURING COMPANY Income Statement < Prev 4 of 5 Next > MacBook Pro

Answer 1

Income Statement as per GAAP
Particulars	Amount
Revenues	174,000.00
Cost Of Goods Sold (53500+42800)	96,300.00
Gross Profit	77,700.00
Selling, General And Administrative Expenses (17050+13700)	30,750.00
Net Income	46,950.00
Income Statement as per Contribution Margin Approach
Particulars	Amount
Revenues	1,74,000.00
Less: Variable Costs
Variable Product Cost	42,800.00
Variable Selling And Administrative Cost	13,700.00
Total Variable Cost	56,500.00
Contribution (c=a-b)	1,17,500.00
Fixed Costs
Fixed Product Cost	53,500.00
Fixed Selling And Administrative Cost	17,050.00
Total Fixed Cost (d)	70,550.00
Net Profit (c-d)	46,950.00