Question

Hello, I need help learning where to put the correct numbers. and knowing where/how to show my work

PR 20-1A Absorption and variable costing income statements During the first month of operations ended May 31, 2012, Dorm Fridge Company manu- factured 12,500 microwaves, of which 11,700 were sold. Operating data for the month are summarized as follows: $2,106,000 Sales ........... Manufacturing costs: Direct materials. Direct labor Variable manufacturing cost ...... Fixed manufacturing cost ...... Selling and administrative expenses: Variable ............ Fixed $1,050,000 312,500 268,750 137,500 1,768,750 $ 169,650 76,050 245,700 Instructions 1. Prepare an income statement based on the absorption costing concept. 2. Prepare an income statement based on the variable costing concept.

Answer 1

WORKING NOTES:
	CALCULATION OF FIXED OVERHEAD RECOVERY RATE
	Fixed Manufacturing Cost	$               1,37,500
	Recovery Rate = $ 137,500 / 12,500	$                       11.0
	Fixed Assets recovered = 11,700 Units X $ 11 =	$               1,28,700
	Ending inventory = 800 Units X $ 11 =	$                     8,800
SOLUTION :	ABSORPTION COSTING INCOME STATEMENTS
	PARTICULARS	AMOUNT	AMOUNT
	Sales		$                 21,06,000
	Manufacturing Cost
	Direct Material	$            10,50,000
	Direct Labor	$               3,12,500
	Variable Manufacturing cost	$               2,68,750
	Fixed Manufacturing cost (Recovered )	$               1,28,700
			$                 17,59,950
	Gross Profit		$                    3,46,050
	Selling and administrative Expenses
	Variable		$                    1,69,650
	Fixed		$                       76,050
	Net Income		$                    1,00,350
	VARIABLE COSTING INCOME STATEMENTS
	PARTICULARS	AMOUNT	AMOUNT
	Sales		$                 21,06,000
	Manufacturing Cost
	Direct Material	$            10,50,000
	Direct Labor	$               3,12,500
	Variable Manufacturing cost	$               2,68,750
			$                 16,31,250
	Variable of Selling and administrative exps.		$                    1,69,650
	Gross Profit		$                    3,05,100
	Fixed Expenses:
	Fixed Maufacturing Cost		$                    1,37,500
	Selling Fixed Cost		$                       76,050
	Net Income		$                       91,550