Question

1. PR.20-01B ALGO (Algorithmic) Absorption and Variable Costing Income Statements During the first month of operations ended July 31, YoSan Inc. manufactured 11,100 flat panel televisions, of which 10,300 were sold. Operating data for the month are summarized as follows: $1,802,500 Sales Manufacturing costs: Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses: Variable Fixed $910,200 277,500 233,100 122,100 1,542,900 $144,200 66,300 210,500 Required:

Answer 1

A B 1 1) Yasan inc. 2 Adsroption Costing Income statement For the month ended July 31 Amount 4 5 Particulars Amount 6 Sales(10,300units) 7 Less:Cost of goods sold 8 Beginning inventory 9 Add:Cost of goods manufactured 10 Director materials $ 18,02,500 $ 9,10,200 2,77,500 2,33,100 1,22,100 15,42,900 11 Direct labor 12 Variable manufacturing overheads 13 Fixed manufacturing overheads 14 Cost of goods available for sale 15 Less:ending inventory(800units) 16 Direct materials 17 Direct labour 18 Variable manufacturing overheads 19 Fixed manufacturing overheads $ $ $ $ 65,600 $ 20,000 16,800 8,800 1,11,200 $ $ 20 21 Cost of goods sold 22 Gross margin 23 Less:Selling and adinistrative expenses: 24 Variable selling and administrative expenses 25 Fixed selling and administrative expenses 26 Total selling and administrative expense $ 14,31,700 S 3,70,800 $ 1,44,200 66.300 $ $ 2,10,500 $ 27 Net income 1,60,300

A B C 1 1) Yasan inc. 2 Adsroption Costing Income statement For the month ended July 31 Amount 4 Amount 5 Particulars 1802500 6 Sales(10,300units) 7 Less:Cost of goods sold 8 Beginning inventory 9 Add:Cost of goods manufactured 10 Director materials 0 910200 277500 233100 11 Direct labor 12 Variable manufacturing overheads 13 Fixed manufacturing overheads 14 Cost of goods available for sale 15 Less:ending inventory(800units) 16 Direct materials 122100 -SUM (B10:B13) -(910200/11100)*800 (277500/11100)*800 - (233100/11100)*800 ( 122100/11100)* 800 -SUM(B16:B19) 17 Direct labour 18 Variable manufacturing overheads 19 Fixed manufacturing overheads 20 21 Cost of goods sold 22 Gross margin 23 Less:Selling and adinistrative expenses: 24 Variable selling and administrative expenses 144200 25 Fixed selling and administrative expenses 26 Total selling and administrative expense 27 Net income -B8+ B14- B20 -C6-C21 66300 - SUM (B24: B25) - C22- C26

A C 29 2) 30 Yosan Inc 31 Variable costing Income statement For the month ended July 31 Amount 32 Amount $18,02,500 33 Particulars 34 Sales 35 Less:Variable cost $ 8,44,600 $ 2,57,500 $ 2,16,300 1,44,200 36 Direct materials 37 Direct labour 38 Variable manufacturing overheads 39 Variable selling and administrative expenses 40 Total variable cost 41 Contribution Margin 42 Less:Fixed Cost 43 Fixed manufacturing overheads 44 Fixed selling and administrative expenses 45 Total Fixed costs $14,62,600 3,39,900 $ 1,22,100 $ 66.300 1,88,400 1,51,500 46 Net income 47 48 3) 49 50 The Income from operations reported under absorption costing exceeds the 5income from operations reported under variable costing by the difference between the two,due to Fixed manufacturing costs that are deferred to a future 52 month under Absorption costing 53 Reconciliation of Income from Absoption Vs variable costing Amount S 1,60,300 54 55 Particulars 56 Income under absorption costing Less:Fixed manufacturing overheads allocated to 57 ending inventory (122100/11100)*800 58 Income under variable costing $ 8,800 S 1,51,500

A C 29 2) 30 Yosan Inc 31 Variable costing Income statement For the month ended July 31 Amount 32 33 Particulars Amount 34 Sales 1802500 35 Less:Variable cost 36 Direct materials 37 Direct labour 38 Variable manufacturing overheads 39 Variable selling and administrative expenses 144200 40 Total variable cost 41 Contribution Margin 42 Less:Fixed Cost 43 Fixed manufacturing overheads 44 Fixed selling and administrative expenses 45 Total Fixed costs 46 Net income -(910200/11100)*10300 (277500/11100)*10300 (233100/11 100)*10300 SUM(B36:B39) -C34-C40 122100 66300 =SUM(B43:B44) -C41- C45 47 48 3) 49 50 51 The Income from operations reported under absorption costing exceeds the income from operations reported under variable costing by the difference between the two,due to Fixed manufacturing 52 costs that are deferred to a future month under Absorption costing 53 Reconciliation of Income from Absoption Vs variable costing 54 Amount 55 Particulars 56 Income under absorption costing Less:Fixed manufacturing overheads allocated to ending 57 inventory(122100/11100)*800 58 Income under variable costing 160300 =(122100/111000)*800 -B56-B57 59