Question

Question 1 Leigh Company, which has only one product, reported the following results for January: Selling price... S100 Units in beginning inventory Units produced............... Units sold................ Units in ending inventory... 300 1,200 1,400 100 Variable costs per unit: Direct materials ... Direct labor. .. Variable manufacturing overhead.. Variable selling and administrative....... Fixed costs: Fixed manufacturing overhead................. Fixed selling and administrative........... $9,600 $1,400 Cost of goods sold is a variable cost in this company.

Answer 1

Leigh Company Traditional Income Statement Sales ($100 * 1.400 units) Less: Cost of goods sold Gross margin Less: Selling and administrative expenses: Net Operating Income $140,000 $123,200 $16.800 $12.600 $4,200 Workings: Cost of goods sold = Unit product cost * units sold = [S17 + $59+S4 + ($9,600/1,200 unit produced)] * 1.400 = $123,200 Selling expenses = Variable selling and administrative expense + Fixed selling and administrative expense = [(S8 per unit * 1.400 units) + $1,400] $12,600 $140,000 Leigh Company Contribution Formate Income Statement Sales ($100 * 1.400 units) Variable expenses: Cost of goods sold [($17 + $59 +S4) * 1,400 units] $112.000 Selling and Administrative expenses (S8 * 1,400 units) $11,200 $123,200 $16.800 Contribution margin Fixed expenses: Manufacturing overhead Selling and Administrative expenses $9.600 $1,400 $11.000 $5,800 Net Operating Income