Question

Consider the following information for Presidio Inc.'s most recent year of operations. Additional information for Presidio's most recent year of operations follows: 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 ($258,940 +2,200 units) Total variable selling expenses ($12 per unit sold) Total fixed general and administrative expenses 2,200 1,400 $ 610.00 55.00 85.00 35.00 117.70 16,800.00 72,000.00 Required: 2. Complete a full absorption costing income statement and a variable costing income statement for Presidio. Assume there was no beginning inventory. Presidio, Inc. Full Absorption Income Statement Less: Cost of Goods Sold Gross Margin Net Operating Income

Answer 1

Answer:

Answer 2
Full absorption costing Income statement
Presidio Inc.
Full absorption Income statement
	Amount($)
Sales [1400 units x $610]	8,54,000
Less : Cost of goods sold [1400 units x $292.70]	4,09,780
Gross Margin	4,44,220
Less : Selling and administrative expenses
- Selling expenses [1400 units x $12]	16,800
- general and administrative expenses	72,000
Net Operating Income	3,55,420
Presidio Inc.
Contribution Margin Income statement
	Amount($)
Sales [1400 units x $610]	8,54,000
Less : Variable cost
- Cost of goods sold [1400 units x $175]	2,45,000
- Selling expenses [1400 units x $12]	16,800
Contribution Margin	5,92,200
Less : Fixed Expenses
- Fixed Manufacturing Overheads	2,58,940
- General and administrative expenses	72,000
Net Operating Income	2,61,260
Working
Calculation of cost per unit
	Absorption costing	Variable costing
Direct Materials per unit	55.00	55.00
Direct Labor per unit	85.00	85.00
Variable Manufacturing overhead per unit	35.00	35.00
Fixed Manufacturing overhead per unit	117.70
Cost per unit	292.70	175.00
Answer 3
Difference in profit between full absorption costing and variable costing
		Amount($)
Net Operating Income as per Full Absorption costing		3,55,420
Less : Net Operating Income as per Variable costing		2,61,260
Difference in profit		94,160