Question

Absorption-Costing Income Statement During the most recent year, Beyta Company had the following data: Units in beginning inventory 10,000 Units produced Units sold ($60 per unit) 8,800 Variable costs per unit: Direct materials Direct labor Variable overhead Fixed costs: Fixed overhead per unit produced Fixed selling and administrative $138,000 Required: 1. Calculate the cost of goods sold under absorption costing. Feedback 2. Prepare an income statement using absorption costing. Beyta Company Income Statement under Absorption Costing For the Most Recent Year $ 528,000 Sales Less: Cost of goods sold Gross margin Less: Selling and administrative expense 138,000 Operating income

Answer 1

absorption costing is also known as full cost method. in absorption costing we including the both of the  variable cost & fixed cost.

particular	units	rates($)	amount($)
direct material	10000	12	1,20,000
direct labour	10000	7	70,000
variable overhead	10000	5	50,000
fixed cost	10000	8	80,000
total production costs	10000	32	3,20,000
add : opening stock	-	-	-
less closing stock	1200	32	38400
total	8800	32	2,81,600

total cost of good sold is $2,81,600...

2. income statement

sales	$5,28,000
less : cost of goods sold	$2,81,600
gross margin	$2,46,400
less : selling & admin expenses	$1,38,000
operating income	$1,08,400