Question

The following information pertains to the first year of operation for Crystal Cold Coolers Inc.: Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($203, 000/2,900 units) Total variable selling expenses ($15 per unit sold) Total fixed general and administrative expenses. 2,900 2,600 $ 345 $ 50 $ 40 13 $ 70 $39,000 $60,000 Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. B 2

Answer 1

Absorption Costing
Sales		897000	[2600*345]
Less: Cost of goods sold
Beginning Inventory		0
Cost of goods manufactured
Direct Materials	145000		[2900*50]
Direct Labor	116000		[2900*40]
Variable manufacturing overheads	37700		[2900*13]
Fixed manufacturing overheads	203,000
Cost of goods available for sale	501,700
Ending inventory	51,900		[300*(50+40+13+70)]
Cost of goods sold		449,800
Gross margin		447,200
Less: Non manufacturing expenses
Variable selling and administrative expenses	39000		[2600*15]
Fixed selling and administrative expenses	60,000
Total Selling and administrative costs		99000
Net Income		348,200

Variable Costing
Sales		897000	[2600*345]
Less: Cost of goods sold
Beginning Inventory		0
Cost of goods manufactured
Direct Materials	145000		[2900*50]
Direct Labor	116000		[2900*40]
Variable manufacturing overheads	37700		[2900*13]
Cost of goods available for sale	298,700
Ending inventory	30,900		[300*(50+40+13)]
Variable cost of goods sold		267,800
Variable selling and administrative expenses		39000
Contribution Margin		590,200
Less: Non manufacturing expenses
Fixed manufacturing overheads	203,000		[2600*15]
Fixed selling and administrative expenses	60,000
Total fixed expenses		263000
Net Income		327,200

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