and Variable Costing Exercise Check m Sims Company, a manufacturer of tablet com

Question

and Variable Costing Exercise Check m Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. ts cost and sales information for this yea follows. Manufacturing costs Direct materials 40 per unit 60 per unit head costs for the year $3,000, 000 $7,000, 000 Pixed overhead Selling and·?inistrative costs for the 770,000 4.250,000 Variable Produetion and sales for the year Units produced Units sold Sales price pee wnit 100,000 units 70, 000 units 350 per unit 1 Prepare an income statement for the year using variable costing 2. Prepare an income statement for 3. Under what the year using absorption costing s reported income identical under both absorption costing and variable costing? ircumstancels) is reported income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an income statement for the year using variable costing.

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Income reported under absorption costing and variable costing will be identical only when unit produced and unit sold always remaing equal.

SIMS Company Variable Costing income statement
For Year ended December 31, 2017 Particulars Per unit Amount Sales $350.00 $24,500,000.00 Variable Cost: Direct material $40.00 $2,800,000.00 Direct labor $60.00 $4,200,000.00 Variable factory overhead $30.00 $2,100,000.00 Variable Selling and Administrative Expenses $11.00 $770,000.00 Total Variable costs $9,870,000.00 Contribution $14,630,000.00 Fixed Manufacturing Overhead $7,000,000.00 Fixed Selling & Administrative Expenses $4,250,000.00 Net Income $3,380,000.00

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