Question

S6-15 (similar to) O'Rafferty's Products manufactures a single product. Cost, sales, and production information for the company and its single product is as follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare an income statement for the upcoming year using variable costing. O'Rafferty's Products Contribution Margin Income Statement (Variable Costing) For the Year Ended December 31 Sales revenue $ 792,000 Less: Variable expenses Variable cost of goods sold 492,000 Variable operating expenses 48,000 Contribution margin 252,000 Less: Fixed expenses Fixed manufacturing overhead 96,000 Fixed operating expenses 88,000 68,000 Operating income i More Info - X Selling price per unit is $66 Variable manufacturing costs per unit manufactured includes direct materials (DM), direct labor (DL), and variable MOH) $41 Variable operating expenses per unit sold $4 Fixed manufacturing overhead (MOH) in total for the year $96.000 Fixed operating expenses in total for the year $88.000 Units manufactured and sold for the year 12.000 units Requirement 2. Prepare an income statement for the upcoming year using absorption costing. . . • O'Rafferty's Products Income Statement (Absorption Costing) For the Year Ended December 31 Sales revenue Less: Cost of goods sold Gross profit Print | Done $ 792,000 Less: Operating expenses Operating income

Answer 1

Answer:

Amount Calculation $ 792,000 (12,000 X $66) Requirement 1 Contribution Margin Income Statement For the year ended December 31 Particulars Sales Revenue Less: Variable Expenses 1. Variable Cost of Goods Sold 2. Variable Operating Expenses Contribution Margin Less: Fixed Expenses 1. Fixed Manufacturing Overhead 2. Fixed Operating Expenses Operating Income $ 492,000 (12,000 X $41) $ 48,000 (12,000 X $4) $ 252,000 (792,000 - 492,000 - 48,000) $ 96,000 $ 88,000 $ 68,000 (252,000 - 96,000 - 88,000) Requirement 2 Income Statement (Absorption Costing) For the year ended December 31 Particulars Sales Revenue Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Operating Income Amount Calculation $ 792,000 (12,000 X $66) $ 588,000 (12,000 X $41) + $96,000 $ 204,000 (792,000 - 588,000) $ 136,000 (12,000 X $4) + $88,000 $ 68,000 (204,000 - 136,000) Since the number of units produced and manufactured are same, there will be no closing stock to be considered for absorption costing.