Question

ims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year ollows. 35 per unit 55 per unit 30 per unit $7,350,000 (per year) Manufacturing costs Direct materials Direct labor Overhead costs Variable Fixed Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit $ 750,000 $4.500.ee 195,000 units 75,000 units 350 per unit 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using variable costing. 26.250.000 SIMS COMPANY Variable Costing Income Statement Sales Less: Variable costs Direct materials | $ 2,625,000 Direct Labor 4,125 000 Variable overhead costs Variable selling and administrative expenses 750 000 Total variable costs Contribution margin < Prey 3 of 9 !!! Next >

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

SIMS Company
Under variable costing only variable production cost is a part of product cost and all the fixed cost is charged off in the month its incurred.
Calculation of product cost	Amount $	Note
Direct materials	35.00
Direct labor	55.00
Variable production	30.00
Product cost	120.00	A
Cost of goods manufactured	Amount $
Production units	105,000.00	B
Product cost	120.00	See A
Cost of goods manufactured	12,600,000.00	C=B*A
Ending Inventory	Amount $
Opening units	-	D
Add: Production units	105,000.00	See B
Less: Sales units	75,000.00	E
Ending Inventory (units)	30,000.00	F
Product cost	120.00	See A
Cost of Ending Inventory	3,600,000.00	G=F*A
Sales Revenue	Amount $
Units sold	75,000.00	See E
Sell price	350.00	H
Sales Revenue	26,250,000.00	I=E*H
Answer 1
Income Statement- Variable costing	Amount $
Sales	26,250,000.00	See I
Less:
Cost of goods manufactured	12,600,000.00	See C
Add: Opening Finished goods	-
Less: Closing Finished goods	3,600,000.00	See G
Cost of goods sold	9,000,000.00	J
Variable selling and administrative cost	750,000.00
Contribution	16,500,000.00	K
Less: Fixed costs
Fixed Production overhead	7,350,000.00	L
Fixed selling and administrative costs	4,500,000.00	M
Net Income	4,650,000.00
Under absorption costing fixed production overhead is also allocated to units and it is a part of product cost.
Cost of goods manufactured	Amount $
Production units	105,000.00
Variable Product cost per unit	120.00
Variable Product cost	12,600,000.00	See C
Fixed Production overhead	7,350,000.00	See L
Cost of goods manufactured	19,950,000.00	N=C+L
Production units	105,000.00	See B
Product cost	190.00	O=N/B
Ending Inventory	Amount $
Opening units	-	D
Add: Production units	105,000.00	See B
Less: Sales units	75,000.00	See E
Ending Inventory (units)	30,000.00	See F
Product cost	190.00	See O
Cost of Ending Inventory	5,700,000.00	P=F*O
Sales Revenue	Amount $
Units sold	105,000.00	See E
Sell price	350.00	See H
Sales Revenue	36,750,000.00	See I
Answer 2
Income Statement- Absorption costing	Amount $
Sales	36,750,000.00	See I
Less:
Cost of goods manufactured	19,950,000.00	See N
Add: Opening Finished goods	-
Less: Closing Finished goods	5,700,000.00	See P
Cost of goods sold	14,250,000.00	Q
Gross Profit	22,500,000.00
Less: Operating Expenses
Fixed selling and administrative costs	4,500,000.00
Variable selling and administrative cost	750,000.00
Net Income	17,250,000.00