Question

EX 20-5 Variable costing income statement On June 30, the end of the first month of operations, Clowney Company prepared the following income statement, based on the absorption costing concept: Clowney Company Absorption Costing Income Statement For the Month Ended June 30, 2013 $537,600 $448,000 64,000 Sales (9,600 units) ... Cost of goods sold: Cost of goods manufactured (11,200 units). Less inventory, June 30 (1,600 units)......... Cost of goods sold......................................... Gross profit....................................................... Selling and administrative expenses ............................ Income from operations .......................................... 384,000 $153,600 82,080 $ 71,520 If the fixed manufacturing costs were $50,400 and the variable selling and administrative expenses were $45,600, prepare an income statement according to the variable costing concept.

Answer 1

Solution

Clowney Company
Variable costing Income statement
Sales		$      537,600.00
Less: Variable costs
Variable cost of goods sold	$     340,800.00
Variable Selling and administrative expenses	$       45,600.00
Total Variable cost		$      386,400.00
Contribution margin		$      151,200.00
Less: Fixed Costs
Fixed manufacturing expenses	$       50,400.00
Fixed Selling and administrative expenses	$       36,480.00
Total Fixed Costs		$         86,880.00
Net Income		$         64,320.00

Working

Total cost of goods manufactured	$     448,000.00
Less: Fixed cost of goods manufactured	$       50,400.00
Variable manufacturing cost	$     397,600.00
Divided by units produced	11200
Cost per unit	$               35.50
Units sold	9600
Cost of goods sold	$     340,800.00