6.value:
3.75 points
Whitman Company has just completed its first year of operations. The companyâs absorption costing income statement for the year appears below:
Whitman Company
Income Statement
Sales (38,000 units à $41.60 per unit) $ 1,580,800
Cost of goods sold (38,000 units à $22 per unit) 836,000
Gross margin 744,800
Selling and administrative expenses 399,000
Net operating income $ 345,800
The companyâs selling and administrative expenses consist of $285,000 per year in fixed expenses and $3 per unit sold in variable expenses. The $22 per unit product cost given above is computed as follows:
Direct materials $ 11
Direct labor 4
Variable manufacturing overhead 2
Fixed manufacturing overhead ($265,000 ÷ 53,000 units) 5
Absorption costing unit product cost $ 22
Required:
1.
Prepare the companyâs income statement in the contribution format using variable costing.
2.
Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement.
6.value:
3.75 points
Whitman Company has just completed its first year of operations. The companyâs absorption costing income statement for the year appears below:
Whitman Company
Income Statement
Sales (38,000 units à $41.60 per unit) $ 1,580,800
Cost of goods sold (38,000 units à $22 per unit) 836,000
Gross margin 744,800
Selling and administrative expenses 399,000
Net operating income $ 345,800
The companyâs selling and administrative expenses consist of $285,000 per year in fixed expenses and $3 per unit sold in variable expenses. The $22 per unit product cost given above is computed as follows:
Direct materials $ 11
Direct labor 4
Variable manufacturing overhead 2
Fixed manufacturing overhead ($265,000 ÷ 53,000 units) 5
Absorption costing unit product cost $ 22
Required:
1.
Prepare the companyâs income statement in the contribution format using variable costing.
2.
Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement.
