Question

Variable Costing Income Statement On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept $4,440,000 Sales (96,000 units) Cost of goods sold: Cost of goods manufactured Less ending inventory (24,000 units) Cost of goods sold $3,120,000 624,000 2.496.000 Gross profit $1,944,000 288,000 Selling and administrative expenses Income from operations $1,656,000 a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar Rhys Company Income Statement Variable Costing For the Month Ended July 31 Var

Answer 1

Answer:

Rhys Company
Income statement-variable costing
For the month ended July 31
		Amount($)
sales(96000 Units)		44,40,000
Variable cost of goods sold
Variable cost of goods manufactured (3120,000-132,000)	29,88,000
less :Ending inventory	-5,97,600
Variable cost of goods sold(COGS)		23,90,400
Manufacturing Margin		20,49,600
selling and administrative expense(Variable )		1,15,200
Contribution		19,34,400
fixed costs:
fixed manufacturing costs		1,32,000
fixed selling & administrative expense   (288,000-115,200)		1,72,800
Income from operations		16,29,600
Working
(3120000-132000)/120000 Units= 24.90
ending inventory=24000 Units *24.90= 597,600
B)
		Amount($)
Absorption costing income from operations		16,56,000
variable costing income from operations		16,29,600
Difference		26,400