Tollins Company Data | ||||
July | August | September | ||
Production in units | 85,000 | 80,000 | 60,000 | |
Sales in units | 70,000 | 75,000 | 80,000 | |
Inventory at July 1 | 5000 units at $16 each | |||
Selling price per unit | $ 25 | |||
Variable manufacturing costs per unit | $ 9 | |||
Variable selling and administrative costs per unit sold | $ 6 | 6.5882353 | $ 47 | |
Fixed manufacturing overhead per month | $ 560,000 | |||
Fixed selling and adminitrative expenses per month | $ 200,000 | |||
Other information: | ||||
Fixed overhead is allocated to units of production based on a budgeted production volume of 80,000 units per month | ||||
Any over or underallocated overhead is written off to cost of goods sold | ||||
There are no beginning or ending work in process inventories |
Given the inforation prepare income statements for each month under both absorption and variable for each month.
(please give details explanations of the calculations(
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Working | Absorption | Variable | |||||
Variable manufacturing Cost | $ 9 | $ 9 | |||||
Fixed manufacturing overhead ($560,000/80,000) | $ 7 | ||||||
Unit Product Cost | $ 16 | $ 9 | |||||
Absorption: | |||||||
July | August | September | |||||
Sale Value | $ 1,750,000 | $ 1,875,000 | $ 2,000,000 | ||||
Less: Cost of Goods Sold | |||||||
Beginning Inventory | $ - | $ 240,000 | $ 320,000 | ||||
Add: Production | $ 1,360,000 | $ 1,280,000 | $ 960,000 | ||||
Cost of goods available for sale | $ 1,360,000 | $ 1,520,000 | $ 1,280,000 | ||||
Less: Ending inventory | $ (240,000) | $ (320,000) | $ - | ||||
Cost of goods sold | $ 1,120,000 | $ 1,200,000 | $ 1,280,000 | ||||
Gross Margin | $ 630,000 | $ 675,000 | $ 720,000 | ||||
Less: Selling and Admin Expense | |||||||
Variable Selling and admin | $ 420,000 | $ 494,118 | $ 3,760,000 | ||||
Fixed Selling and admin | $ 200,000 | $ 200,000 | $ 200,000 | ||||
Net Income | $ 10,000 | $ (19,118) | $ (3,240,000) | ||||
Variable: | |||||||
July | August | September | |||||
Sale Value | $ 1,750,000 | $ 1,875,000 | $ 2,000,000 | ||||
Less: Variable Cost | |||||||
Variable Cost of goods sold | $ 630,000 | $ 675,000 | $ 720,000 | ||||
Variable Selling and admin | $ 420,000 | $ 494,118 | $ 3,760,000 | ||||
Contribution Margin | $ 700,000 | $ 705,882 | $ (2,480,000) | ||||
Less: Fixed Expense | |||||||
Manufacturing cost | $ 560,000 | $ 560,000 | $ 560,000 | ||||
Fixed Selling and admin | $ 200,000 | $ 200,000 | $ 200,000 | ||||
Net Income | $ (60,000) | $ (54,118) | $ (3,240,000) |
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