oswell Company produces plastic that is used for injection-molding applications

Question

oswell Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2011, the first year of operations, Coswell produced 5,800 tons of plastic and sold 3,770 tons. In 2012, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,400, variable manufacturing costs were 20% of the sales price of units produced, variable selling expenses were 11% of the selling price of units sold, fixed manufacturing costs were $3,306,000, and fixed administrative expenses were $528,000.

Explanation / Answer

Income statement is prepared as under basis the given information.

Particulars 2011 2012 Sales 9048000 13920000 Less: Variable Cost of goods sold 2784000 1809600 Variable selling expenses 995280 1531200 Contribution Margin 5268720 10579200 Fixed manufacturing Overhead 3306000 3306000 fixed administrative expenses 5,28,000 5,28,000 Net operating Income 14,34,720 67,45,200

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