Question

Diaz Company reports the following variable costing income statement for its single product. This company's sales totaled 58.000 units, but its production was 88.000 units. It had no beginning finished goods inventory for the current period $3,944,000 DIAY COMPANY Income Statement (Variable Costing) Sales (5,000 units * $68.00 per unit) Variable expenses Variable manufacturing expense (58,000 units $28.00 per unit) Variable selling and admin. expense (58,000 units $5.00 per unit) Total variable expenses Contribution margin Fixed expenses Fixed averhead Fixed selling and administrative Total fixed expenses lit 141 14 1.570,400 336, 400 2.886,500 1,937,200 422,400 211,200 633, 60 $1,303,600 1. Convert Diar's variable costing Income statement to an absorption costing income statement. 2. Fill in the blanks: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Convert Diar's variable costing Income statement to an absorption costing income statement DIAZ COMPANY

Answer 1

$ 3,944,000 DIAZ COMPANY Absorption Costing Income Statement Sales Less: Cost of goods sold Fixed overhead costs 278,400 Variable manufacturing costs 1,670,400 Cost of goods sold Gross margin Selling general and administrative expenses Variable selling and administrative expenses 336,400 Fixed selling and administrative expenses 211,200 Total Selling and administrative expenses Net Income 1,948,800 1,995,200 547,600 1,447,600 The dollar difference in variable costing income and absorption costing income 30,000 Units X $ 4.80 Fixed overhead per unit $ Working Notes Fixed overhead Number of units produced Fixed overhead per unit (422,400 / 88,000) Fixed overhead costs (58,000 $ 4.80) 422,400 88,000 4.80 278,400 $ Ending Units Total units produced Less: Units sold Ending units 88,000 (58,000) 30,000