Question

Required information [The following information applies to the questions displayed below Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs Variable (3,250 units x $140) Fixed (3,250 units x $8e) $ 310 per unit 110,000 units 113,250 units 3,250 units $ 455,000 260,000 $ 715,000 Total Manufacturing costs this year Direct materials $ $ 44 per unit 62 per unit Direct labor Overhead costs this year Variable overhead Fixed overhead $3,400,e00 $7,400,000 Selling and administrative costs this year Variable Fixed $1,400,000 4,400,000

Answer 1

1. Income Statement under Variable Costing Method

Income Statement under variable costing Method
Sales			35,107,500
($310 * 113250 Units)
Less - Variable Cost of Goods Sold
Direct Material	($44 * 110000 Units)	4,840,000
Direct Labour	($62 * 110000 Units)	6,820,000
Variable Overheads		3,400,000
Vatiabe Cost of Goods Manufactured		15,060,000
Add : Beginning Inventory	($140 * 3250 Units)	455,000
Less : Ending Inventory		0	15,515,000
Gross Contribution Margin			19,592,500
Less : Variables Selling Overheads			1,400,000
Net Contribution Margin			18,192,500
Less : Fixed Overheads
Fixed Manufacturing Overheads		7,400,000
Fixed Beginning Inventory Cost		260,000
Fixed Selling and Administrative Overheads		4,400,000	12,060,000
Net Income / (Loss) Before Tax			6,132,500

2. Income Statement under Absorption Costing

Income Statement under Absorbtion costing Method
	Qty	Rate/Pu	Amount
Sales	113250	$310	$35,107,500
Less - COGS
Direct Material	110000	44	$4,840,000
Direct Labour	110000	62	$6,820,000
Variable Overheads	110000	30.91	3,400,000
Fixed Overheads	110000	67.27	7,400,000
Cost of Goods Manufactured			$22,460,000
Add : Beginning Inventory
Varibale Beginning Inventory Cost	3250	140	$455,000
Fixed Beginning Inventory Cost	3250	80	$260,000
Less : Ending Inventory			0
Cost of Goods Sold			$23,175,000
Gross Margin			$11,932,500
Less : Selling and Administrative Overhead Cost this year
Variable			$1,400,000
Fixed			$4,400,000
			$5,800,000
Net Income / (Loss) Before Tax			$6,132,500