Nesman Company, which has only one product, has provided the following data conc

Question

Nesman Company, which has only one product, has provided the following data concerning its most recent month of operations:

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

a.

Prepare a contribution format income statement for the month using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

  Selling price $ 119   Units in beginning inventory 370   Units produced 6,420   Units sold 6,330   Units in ending inventory 460   Variable costs per unit:   Direct materials $ 46   Direct labor $ 21   Variable manufacturing overhead $ 2   Variable selling and administrative $ 18   Fixed costs:   Fixed manufacturing overhead $ 141,240   Fixed selling and administrative $ 56,970

Explanation / Answer

Solution:

Sales - 6,330 units * $ 119 per unit 753,270 Less: Variable cost Direct materials - 46 * 6,330            291,180 Direct labor - 21 * 6,330            132,930 Variable manufacturing overhead - 2 * 6,330              12,660 Variable selling expense - 18 * 6,330            113,940          550,710 Contribution margin          202,560 Less: Fixed cost Fixed manufacturing overhead 141,240 Fixed selling and administrative expense 56,970 Total fixed cost 198,210 Net operating income 4,350

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