Absorption and Variable Costing Income Statements for Two Months and Analysis Du

Question

Absorption and Variable Costing Income Statements for Two Months and Analysis

During the first month of operations ended May 31, 2015, T-shirt Express Company produced 25,600 designer T-shirts, of which 24,300 were sold. Operating data for the month are summarized as follows:

During June, T-shirt Express Company produced 23,000 designer T-shirts and sold 24,300 T-shirts. Operating data for June are summarized as follows:

1a. Prepare an income statement for May using the absorption costing concept. Enter all amounts as positive numbers.

1b. Prepare an income statement for June using the absorption costing concept. Enter all amounts as positive numbers.

2a. Prepare an income statement for May using the variable costing concept. Enter all amounts as positive numbers.

2b. Prepare an income statement for June using the variable costing concept. Enter all amounts as positive numbers.

Explanation / Answer

Unit Statement   Details May   June Opening Stock                    -                1,300 Production           25,600           23,000 Sales           24,300           24,300 Closing Stock             1,300                     -   Cost Of Prouction Total Variable cost of Production        171,520         154,100 Units Variable Cost of Production $           6.70 $            6.70 Total cost of Production in Absorption method        184,320         166,900 Unit cost of Production in Absorption method $           7.20 $            7.26 T -Shirt Express Company Income Statement Absorption Costing format for the period ending May 31.2015. Details Amt $ Sales Revenue        204,120 Cost of Production Opening stock at Full cost                    -   Cost of Goods Manufactured        184,320 Less: Closing Stock at Full cost           (9,360) Cost Of Goods Sold        174,960 Gross Profit           29,160 Selling & Admin Expenses           16,820 Net Operating Income           12,340 T -Shirt Express Company Income Statement Absorption Costing format for the period ending Jun 30.2015. Details Amt $ Sales Revenue        204,120 Cost of Production Opening stock at Full cost             9,360 Cost of Goods Manufactured        166,900 Less: Closing Stock at Full cost                    -   Cost Of Goods Sold        176,260 Gross Profit           27,860 Selling & Admin Expenses           16,820 Net Operating Income           11,040 Income Statement Contribution Margin Format for the period ending May 31.2015. Details Amt $/Unit Sales Revenue        204,120 Less Variable costs of Goods Opening Inventory at Variable cost                    -   Valuable Cost of Manufacturing        171,520 Less : Closing Stock at Variable cost           (8,710) Variable cost of Goods Sold        162,810 Add Variable Selling & Admin Cost             9,720 Total Variable cost of Sales        172,530 Contribution Margin           31,590 Less Fixed costs Fixed Manufacturing Overhead           12,800 Fixed Selling & Admin Costs             7,100 Total Fixed Costs           19,900 Net Operating Income           11,690 Income Statement Contribution Margin Format for the period ending May 31.2015. Details Amt $/Unit Sales Revenue        204,120 Less Variable costs of Goods Opening Inventory at Variable cost             8,710 Valuable Cost of Manufacturing        154,100 Less : Closing Stock at Variable cost                    -   Variable cost of Goods Sold        162,810 Add Variable Selling & Admin Cost             9,720 Total Variable cost of Sales        172,530 Contribution Margin           31,590 Less Fixed costs Fixed Manufacturing Overhead           12,800 Fixed Selling & Admin Costs             7,100 Total Fixed Costs           19,900 Net Operating Income           11,690

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