Question

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. 30 points $ 35 per unit 55 per unit 20 per unit $8,000,000 (per year) Manufacturing costs Direct materials Direct labor Overhead costs Variable Fixed Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit $ 750,000 $5,000,000 100,000 units 70,000 units 350 per unit $

1.) Need help finding the Contribution Margin and Net Income

2. Prepare an income statement for the year using absorption costing.

Answer 1

SIMS COMPANY VARIABLE COSTING INCOME STATEMENT Per Unit 350 Total 24500000 Sale Direct Material Direct Labor Variable Manufacturing Overheads Variable Selling Overheads Total Variable Cost 35 2450000 55 3850000 20 1400000 10.7143 750000 120.714 8450000 Contribution (SALE - TOTAL VARIABLE COST) 229.286 16050000 Less: Fixed Expenses Fixed Selling and administrative costs Fixed Overheads costs Total Fixed Costs Income Before tax 5000000 8000000 13000000 3050000

SIMS COMPANY ABSORPTION COSTING INCOME STATEMENT Total Sale 24500000 Direct Material Direct Labor Variable Manufacturing Overheads Fixed Overheads costs Cost of Production Less: Closing Finished Goods Add: Opening Finished Goods Cost of goods Sold 3500000 5500000 2000000 8000000 19000000 -5700000 13300000 Variable Selling Overheads Fixed Selling and administrative costs Total Cost of sale 750000 5000000 19050000 Income Before tax 5450000

SIMS COMPANY
VARIABLE COSTING INCOME STATEMENT
	Total
Sale		24500000
Direct Material	2450000
Direct Labor	3850000
Variable Manufacturing Overheads	1400000
Variable Selling Overheads	750000
Total Variable Cost		8450000
Contribution (SALE - TOTAL VARIABLE COST)		16050000
Less: Fixed Expenses
Fixed Selling and administrative costs	5000000
Fixed Overheads costs	8000000
Total Fixed Costs		13000000
Income Before tax		3050000
SIMS COMPANY
ABSORPTION COSTING INCOME STATEMENT
	Total
Sale		24500000
Direct Material	3500000
Direct Labor	5500000
Variable Manufacturing Overheads	2000000
Fixed Overheads costs	8000000
Cost of Production	19000000
Less: Closing Finished Goods	-5700000
Add: Opening Finished Goods	0
Cost of goods Sold		13300000
Variable Selling Overheads	750000
Fixed Selling and administrative costs	5000000
Total Cost of sale		19050000
Income Before tax		5450000