5 Prepare an income statement using the contribution margin approach LO 11-3 AJ
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Question
5 Prepare an income statement using the contribution margin approach LO 11-3
AJ Manufacturing Company incurred $56,000 of fixed product cost and $44,800 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,800 of fixed selling and administrative costs and $14,200 of variable selling and administrative costs. The company sold all of the units it produced for $184,000.
Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).
CREATE AJ MANUFACTURING COMPANY INCOME STATEMENT USING THE TERMS LISTED BELOW:
- COSTS OF GOODS
- FIXED COSTS
- REVENUE
- SELLING AND ADMINISTRATION
- VARIABLE COST
- GROSS MARGIN OR GROSS LOSS
- NET INCOME OR NET LOSS
Prepare an income statement using the contribution margin approach.
CREATE AJ MANUFACTURING COMPANY INCOME STATEMENT USING THE CONTRIBUTION MARGIN APPROACH AND TERMS LISTED BELOW:
- COSTS OF GOODS
- FXED COSTS
- REVENUE
- SELLING AND ADMINISTRATION
- VARIABLE COST
- GROSS MARGIN OR GROSS LOSS
- NET INCOME OR NET LOSS
AJ Manufacturing Company incurred $56,000 of fixed product cost and $44,800 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,800 of fixed selling and administrative costs and $14,200 of variable selling and administrative costs. The company sold all of the units it produced for $184,000.
a.Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).
CREATE AJ MANUFACTURING COMPANY INCOME STATEMENT USING THE TERMS LISTED BELOW:
- COSTS OF GOODS
- FIXED COSTS
- REVENUE
- SELLING AND ADMINISTRATION
- VARIABLE COST
- GROSS MARGIN OR GROSS LOSS
- NET INCOME OR NET LOSS
b.Prepare an income statement using the contribution margin approach.
CREATE AJ MANUFACTURING COMPANY INCOME STATEMENT USING THE CONTRIBUTION MARGIN APPROACH AND TERMS LISTED BELOW:
- COSTS OF GOODS
- FXED COSTS
- REVENUE
- SELLING AND ADMINISTRATION
- VARIABLE COST
- GROSS MARGIN OR GROSS LOSS
- NET INCOME OR NET LOSS
Explanation / Answer
a)
b)
Particulars Amount $ Amount $ Revenue 184000 Less: Cost of Goods Sold Fixed Product cost 56000 Variable product cost 44800 100800 Gross Margin 83200 Less: Fixed Selling Cost 17800 Less: Variable selling cost 14200 32000 Net Income 51200Related Questions
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