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Social Science Clinic => Accounting => Topic started by: naturalchemist on Mar 6, 2021

Title: Aspen Popular Company prepared the following absorption-costing income statement for the year ended ...
Post by: naturalchemist on Mar 6, 2021

Aspen Popular Company prepared the following absorption-costing income statement for the year ended May 31, 2017. 

Sales (8,000 units)

$160,000

Cost of goods sold

108,000

Gross margin

$52,000

Selling and administrative expenses

18,000

Operating income

$ 29,000

Additional information follows: 

Selling and administrative expenses include $1.50 of variable cost per unit sold. There was no beginning inventory, and 8,750 units were produced. Variable manufacturing costs were $11 per unit. Actual fixed costs were equal to budgeted fixed costs

Required: 
Prepare a variable-costing income statement for the same period.

Title: Aspen Popular Company prepared the following absorption-costing income statement for the year ended ...
Post by: aloop on Mar 6, 2021

Sales

$160,000

Variable expenses:

Manufacturing cost of goods sold1

$88,000

Selling and administrative2

12,000

100,000

Contribution margin

$ 60,000

Fixed expenses:

Fixed factory overhead3

$21,875

Fixed selling and administrative4

6,000

27,875

Operating income

$ 32,125

1	8,000 units × $11 = $88,000

2	8,000 units × $1.50 = $12,000

3	[($108,000/8,000 units) - $11] × 8,750 units = $21,875

4	$18,000 - $12,000 = $6,000