Contribution Format:
Total units sold = 35000
Sale price per = $25
Less Var Costs: Dir Mat $5
Dir Lab $6
Var Mfg OH $1
Var S&A exp $2
--------------------------------
Total Var cost = $14
Contibuton pu = Sales - Var cost = 25-14 = 11
Total Cont = No of units sold * Cont pu = 35000*11 = 385,000
Less Fixed costs :
Mfg OH $160,000
S&A OH $210,000
----------------------------
Total Fixed OHs $370,000
Gross Profit = Total Cont - Total Fixed OHs = 385,000-370,000 = $15,000....Ans (A)
Absorption costing profit = $35,000
Less Marginal costing profit = $15000
--------------------------------------------
$20,000
This is due to over absorption of Fixed OH in absorption costing wherein OHs are charged to 40,000 units in place of 35,000 in marginal costing. Thus 5000 units @$4 = $20,000 were over absorbed.
Requirea: 1. Prepare the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement Sales $ 875,000 Variable expenses: 875,000 Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative 160,000 210,000 Fixed selling and administrative 370,000 505,000 Net operating income $ 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement. Reconciliation of Variable Costing and...
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units * $43.10 per unit) Coat of goods sold (42,000 units * $22 per unit) Gross margin Selling and administrative expenses Net operating income $1,810,200 924,000 886,200 483.000 $ 403,200 The company's selling and administrative expenses consist of $315,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $22...
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (41,000 units x $45.10 per unit) Cost of goods sold (41,000 units x $21 per unit) Gross margin Selling and administrative expenses Net operating income $1,849,100 861,000 9BB, 100 471,500 $ 516,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $4 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units X $43.60 per unit) Cost of goods sold (39,000 units X $21 per unit) Gross margin Selling and administrative expenses Net operating income $1,700,400 819,000 881,400 409,500 $ 471,900 The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The $21...
Exercise 6-12 Variable Costing Income Statement; Reconciliation [LO6-2, LO6-3] Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (38,000 units × $43.60 per unit) $ 1,656,800 Cost of goods sold (38,000 units × $21 per unit) 798,000 Gross margin 858,800 Selling and administrative expenses 437,000 Net operating income $ 421,800 The company’s selling and administrative expenses consist of $285,000 per year in fixed expenses...
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: $1,685,100 Whitman Company Income Statement Sales (41,000 units X $41.10 per unit) Cost of goods sold (41,000 units x $21 per unit) Gross margin Selling and administrative expenses Net operating income 861,000 824, 100 430, 500 393.600 $ The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $3 per unit sold in variable expenses....
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units X $41.60 per unit) Cost of goods sold (40,000 units X $24 per unit) Gross margin Selling and administrative expenses Net operating income $1,664,000 960,000 704,000 460,000 $ 244,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $24...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below: Whitman Company Income Statement Sales (42,000 units × $41.10 per unit) $ 1,726,200 Cost of goods sold (42,000 units × $21 per unit) 882,000 Gross margin 844,200 Selling and administrative expenses 525,000 Net operating income $ 319,200 The company’s selling and administrative expenses consist of $315,000 per year in fixed expenses and $5 per unit sold in...
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: Whitman Company Income Statement Sales (39,000 units * $42.10 per unit) Cost of goods sold (39,000 units * $22 per unit) $1,641,900 858,000 Gross margin Selling and administrative expenses 783,900 448,500 Net operating income $335,400 The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $22...
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: White Company Income Statement Sales (41,000 wats X 166.60 per unit) Cost of goods sold (41.000 units X $22 per unit) Grossargin Selling and administrative expenses Het operating income $1.828,600 902.000 926,600 430.500 $496,100 The company's selling and administrative expenses consist of S307.500 per year in fixed expenses and $3 per unit sold in variable expenses. The $22 unit product...