During the first month of operations ended May 31, 2008, FrostZone apliance Comp

Question

During the first month of operations ended May 31, 2008, FrostZone apliance Company manufactured 1,540 refridgerators, of which1,430 were sold. Operating data for the month are summarizedas follows: Sales                                                                            972,400 Manufacturing costs: Directmaterial                                   385,000 Directlabor                                       161,700 Variable manufacturingcost                 61,600 Fixed manufacturingcost                    115,500              723,800 Selling and administrative expenses: Variable                                               92,950 Fixed                                                   42,900               135,850 Prepare an income statement based on the variablecosting concept. During the first month of operations ended May 31, 2008, FrostZone apliance Company manufactured 1,540 refridgerators, of which1,430 were sold. Operating data for the month are summarizedas follows: Sales                                                                            972,400 Manufacturing costs: Directmaterial                                   385,000 Directlabor                                       161,700 Variable manufacturingcost                 61,600 Fixed manufacturingcost                    115,500              723,800 Selling and administrative expenses: Variable                                               92,950 Fixed                                                   42,900               135,850 Prepare an income statement based on the variablecosting concept.

Explanation / Answer

Variable cosrting

Income Statement

unit cost

1,540

395

Variable cosrting

Income Statement

Sales (1430 x $680) $972,400 variable cost of goods sold (1430 x $395a) (564,850) Manufacturing margin $407,550 Variable selling & administrative expense (92,950) Contribution margin $314,600 Fixed Cost:           Fixed manufacturing cost 115,500           Fixed selling & administrative exp. 42,900 (158,400) Income from operation $156,200 a. total refregerators manufactured 1540 of which1,430 were sold Manufacturing cost: Total cost No. of units

unit cost

                       Variable:               Direct material $385,000              Direct labor 161,700              Variable manufacturing cost 61,600 608,300

1,540

395

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