ncome Statements under The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.Absorption Costing and The concept that considers the cost of products manufactured to be composed only of those manufacturing costs that increase or decrease as the volume of production rises or falls (direct materials, direct labor, and variable factory overhead).Variable Costing
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July:
Sales (4,000 units) | $2,600,000 | ||||
Production costs (4,350 units): | |||||
Direct materials | $1,218,000 | ||||
Direct labor | 522,000 | ||||
Variable factory overhead | 87,000 | ||||
Fixed factory overhead | 130,500 | 1,957,500 | |||
Selling and administrative expenses: | |||||
Variable selling and administrative expenses | $60,000 | ||||
Fixed selling and administrative expenses | 25,000 | 85,000 |
a. Prepare an income statement according to the absorption costing concept.
Gallatin County Motors Inc. | |
Absorption Costing Income Statement | |
For the Month Ended July 31 | |
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b. Prepare an income statement according to the variable costing concept.
Gallatin County Motors Inc. | ||
Variable Costing Income Statement | ||
For the Month Ended July 31 | ||
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Fixed costs: | ||
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c. What is the reason for the difference in the amount of operating Income reported in (a) and (b)?
Under the
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Absorption costing income statement- Gallatin County Motors Inc. | ||
Sales | $2,600,000 | |
Less:Cost Of Goods Sold | ||
Beginning Inventory | ||
Direct Materials | $1,218,000 | |
Direct Labor | $522,000 | |
Variable Overhead Costs | $87,000 | |
Fixed Overhead Costs | $130,500 | |
Cost of Goods Available for sales | $1,957,500 | |
Less:Ending Inventory (1957500/4350X350) | -$157,500 | |
Cost Of Goods Sold | $1,800,000 | |
Gross Margin | $800,000 | |
Selling General And Administrative Expense | ||
Fixed Selling And Administrative Cost | $25,000 | |
Variable Selling And Administrative Cost | $60,000 | |
Tota Fixed Expense | $85,000 | |
Net Income (Loss) | $715,000 | |
Variable costing income statement- Gallatin County Motors Inc. | ||
Sales | $2,600,000 | |
Less:Variable Costs | ||
Beginning Inventory | ||
Direct Materials | $1,218,000 | |
Direct Labor | $522,000 | |
Variable Overhead Costs | $87,000 | |
Total Variable Costs of Goods Available | $1,827,000 | |
Less:Ending Finished Goods Inventory (1827000/4350X350) |
-$147,000 | |
Variable Cost Of Goods Sold | $1,680,000 | |
Add: Variable Selling And Administrative Expense | $60,000 | |
Total Variable Costs | $1,740,000 | |
Contribution Margin | $860,000 | |
Less:Fixed Expenses | ||
Fixed Selling And Administration Costs | $25,000 | |
Fixed Overhead Costs | $130,500 | |
Tota Fixed Expenses | $155,500 | |
Net Income (Loss) | $704,500 |
ncome Statements under The reporting of the costs of manufactured products, normally direct materials, direct labor,...
Income statements under absorption costing and variable costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (3,500 units) $2,590,000 Production costs (4,000 units): Direct materials $1,272,800 Direct labor 547,200 Variable factory overhead 89,200 Fixed factory overhead 140,000 2,049,200 Selling and administrative expenses: Variable selling and administrative expenses $63,500 Fixed selling and administrative expenses...
Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (4,000 units) $2,600,000 Production costs (4,350 units): Direct materials $1,218,000 Direct labor 522,000 Variable factory overhead 87,000 Fixed factory overhead 130,500 1,957,500 Selling and administrative expenses: Variable selling and administrative expenses $60,000 Fixed selling and administrative expenses...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (16,500 units) $1,485,000 Production costs (21,000 units): Direct materials $699,300 Direct labor 336,000 Variable factory overhead 168,000 Fixed factory overhead 111,300 1,314,600 Selling and administrative expenses: Variable selling and administrative expenses $203,800 Fixed selling and administrative expenses 78,900 282,700...
help solving this Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (10,000 units) $1,200,000 Production costs (13,000 units): Direct materials $577,200 Direct labor 276,900 Variable factory overhead 139,100 Fixed factory overhead 92.300 1,085,500 Selling and administrative expenses: Variable selling and administrative expenses $168,300 Fixed selling and administrative...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (13,500 units) $1,350,000 Production costs (17,000 units): Direct materials $629,000 Direct labor 302,600 Variable factory overhead 151,300 Fixed factory overhead 100,300 1,183,200 Selling and administrative expenses: Variable selling and administrative expenses $183,400 Fixed selling and administrative expenses 71,000 254,400...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells snownmobile engines. The company began operations on August 1 and operated at 100 % of capacity during the first month. The following data summarize the results for August: Sales (2,000 units) $600,000 Production costs (2,400 units): Direct materials $300,000 Direct labor 115,200 Variable factory overhead 43,200 Fixed factory overhead 21,600 480,000 Selling and administrative expenses: Variable selling and administrative expenses $50,000 Fixed selling and administrative expenses 22,000...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc, assembles and sells snowmobile engines. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: $600,000 Sales (2,000 units) Production costs (2,400 units): Direct materials Direct labor $300,000 115,200 43,200 21,600 Variable factory overhead Fixed factory overhead 480,000 Selling and administrative expenses: Variable selling and administrative expenses $50,000 22,000 Fixed selling and administrative expenses 72,000...
i se the results for Income Statements under Absorption Conting and Variable Casting in County Motors Inc. assemblies and snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data w Sales (4.000 units) $2.600,000 Productions (4.350 units) Direct $1.218.000 Direct labor 522.000 Variable factory overhead Food factory overhead 130,500 1,957,500 ding and administrative expenses Variable selling and administrative expenses Fored selling and administrative expenses 25.000 3.000 ) .....
Income statements under absorption and variable costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (3,500 units) $2,450,000 Production costs (4,000 units): Direct materials $1,204,000 Direct labor 517,600 Variable factory overhead 84,400 Fixed factory overhead 132,400 1,938,400 Selling and administrative expenses: Variable selling and administrative expenses $60,100 Fixed selling and administrative expenses 25,200...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: $1,280,000 Sales (8,000 units) Production costs (10,000 units): Direct materials $592,000 Direct labor 284,000 142,000 Variable factory overhead Fixed factory overhead 95,000 1,113,000 Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $172,500 66,800 239,300...