On October , the end of the first month of operation, Al\'s Company, prepparte t

Question

On October , the end of the first month of operation, Al's Company, prepparte the following income statment based on absorption costing:

Sales (2,600 units) 104,000

Cost of Goods sold:

Cost of Good Manufactured $85,500

less ending inventory (400) 11,400

Cost of good sold 74,100

Gross Profit 29,900

Selling & adminsitrative Expenses 21,500

Income from operation 8,400

if the fixed manufacting cost were $42,900 and te variable selling and adminstrative expense were $14,600, prepare an income statment in accordance witht he variable csting conept.

Explanation / Answer

Hi,

Please find the answer as follows:

Variable Sales 104000 Variable Cost of Goods Sold 74100 Variable Selling Expenses 14600 Contribution Margin 15300 Fixed Selling Expenses 6900 Fixed Factory Overheads 42900 Net Income -34500

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