Question

Absorption and Variable Costing Income Statements During the first month of operations ended July 31, Wolaning manufactured 2.400 flat panel televisions, of which 2.000 were ok Operating data for the month w $2.150.000 a s foto Det materials Direct labor Variable manufacturing cost a cturing cost Selling and strive expenses Variable Food $960,000 420,000 156.000 2000 F 1.824.000 5204.000 96.000 300.000

Answer 1

YoSan Inc.
Variable Costing Income Statement
For the Month Ended July 31, 2016
Sales		$2,150,000
Variable cost of goods sold:
Variable cost of goods manufactured            [Refer working note 1]	$1,536,000
Inventory, July 31                                         [Refer working note 2]	($256,000)
Variable cost of goods sold		$1,280,000
Manufacturing Margin         [Sales - Variable cost of goods sold = $2,150,000 - $1,280,000]		$870,000
Variable selling and administrative expenses		$204,000
Contribution Margin                                             [$870,000 - $204,000]		$666,000
Fixed costs:
Fixed manufacturing costs	$288,000
Fixed selling and Administrative Expenses	$96,000
Total fixed costs                                          [$288,000 + $96,000]		$384,000
Income from operations                                      [$666,000 - $384,000]		$282,000

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Working note 1 - Computation of value of variable cost of goods manufactured
Direct material cost                                           (a)	$960,000
Direct labor cost                                                (b)	$420,000
Variable manufacturing overhead                        (c)	$156,000
Variable cost of goods manufactured              (a + b + c)	$1,536,000

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Working note 2 - Computation of value of ending inventory on July 31 under variable costing
Variable cost of goods manufactured     [Refer working note 1]                                      (a)	$1,536,000
Number of units produced                                                                                                 (b)	$2,400
Cost per unit                                                                                                                      (c = a / b)	$640
Number of units in ending inventory    [Production - Sales = 2,400 units - 2,400 units]     (d)	400
Value of ending inventory                                                                                                    (c x d)	$256,000