Question

Diaz Company reports the following variable costing income statement for its single product. This company's sales totaled 46,000 units, but its production was 76,000 units. It had no beginning finished goods inventory for the current period DIAZ COMPANY Income Statement (Variable Costing) Sales (46,000 units * $56.00 per unit) $2,576,000 Variable expenses Variable manufacturing expense (46,000 units * $27.60 per unit) 1,269,600 Variable selling and admin. expense (46,000 units $4.60 per unit) 211,600 Total variable expenses 1,481,200 Contribution margin 1,094,800 Fixed expenses Fixed overhead 273,600 136,800 Fixed selling and administrative expense Total fixed expenses 410, 400 $ 684,488 Net income 1. Convert Diaz's variable costing income statement to an absorption costing income statement 2. Fill in the blanks:

Answer 1

answer for requirement 1) absorption costing income statement

particulars		amount($)
sales revenue	46000x$56	2576000
less:cost of goods sold
opening inventory
cost of goods manufactured(76000x$31.2)	2371200
cost of goods available for sale	2371200
less:closing stock(30000x$31.2)	936000	1435200
gross profit		1140800
less:selling and administrative expenses
variable	211600
fixed	136800	348400
net operating income		792400

working note:-

a)cost per unit

particulars	amount($)
variable overhead (76000x$27.6)	2097600
fixed overhead	273600
production cost	2371200
total units produced	76000
cost per units produced	31.2

answer for requirement 2)

the dollar defference in variable costing income and absorption costing income =	30000	units	x	$3.6

working note:-

fixed overhead cost per unit=273600/76000=$3.6