Question

Required Information [The following information applies to the questions displayed below.] Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 320 per unit lea.ee units 103,500 units 3,500 units $ 498,099 280.000 $ 770,00 Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs Variable (3,500 units x $140) Fixed (3,500 units x $80) Total Manufacturing costs this year Direct materials Direct labor Overhead costs this year Variable overhead Fixed overhead Selling and administrative costs this year Variable Fixed 48 per unit 68 per unit $3,400,000 $7,800,000 $1,350,000 4,000,000 2. Prepare the current-year income statement for the company using absorption costing. OAK MART COMPANY Absorption Costing Income Statement Beginning inventory Manufacturing costs this year Net income (loss)

Answer 1

Solution: OAK MART (OMPANY Absorption Costing Income Statement Particulars Amount (6) Amounti) (I) Sales (103, Soo units x $320) $35,120,000 (I) Cost o broods Sold Beginning Inventory: . Fixed (3500units x $140) $490,000 •Variable (35pounits X $80) $280,000 Manuyactwing Cost this Year • Direct Materual (wwt) $4,800,000 • Direct Labour (WN-2) $6,800,000 • Variable overhead $3,400,000 • Fixed Overhead $7,000,000 $37,770,000 $22,770,000 Total cost of Goods Sold (1) $10,350,000 (IT) Grosss Prefit (I-I) |(19) Selling & administrative Expenses •Variable $1,350,000 • Fixed $ 4,000,000 Total Selling &administrative Expense $5,350,000 $5,350,000 $500,000 (1) Net operating Income (Loss) ( I-V) WN- Direct Material = Units produced x Price pecuni't DM = 100,000 Units X $48 = $4,800,000 WN-2 Direct Labour = Units Produced x Poice Peclunt DL = 100,000 units X $68 = $6,800,000

There is no ending inventory in this question so I did not show in the absorption costing income statement