October has no beginning inventories. Required: Prepare comparative income state

Question

October has no beginning inventories.

Required:

Prepare comparative income statements, including a comparative schedule of cost of goods sold, for each of these three months in 2016 under each of the following:

1. Absorption costing (include under- or overapplied overhead).

2. Variable costing.

If an amount box does not require an entry, leave it blank or enter "0".

Joshua Company
Comparative Income Statements
For Three Months Ending December 31, 2016 October
(3,000 units sold) November
(4,000 units sold) December
(6,000 units sold) Absorption
Costing Variable
Costing Absorption
Costing Variable
Costing Absorption
Costing Variable
Costing Sales $ $ $ $ $ $ Less: Cost of Goods Sold (Over)/Underapp. Fact. Over. Total Gross Margin (Loss) $ $ $ Manufacturing Margin $ $ $ Less: Fixed Factory Overhead Selling and Admin. Exp. Total Net Income (Loss) $ $ $ $ $ $

Explanation / Answer

I have done it in excel please see below:

Comparative Income Statements For Three Months Ending December 31, 2016 October November December (3,000 units sold) (4,000 units sold) (6,000 units sold) Absorption Variable Absorption Variable Absorption Variable Costing Costing Costing Costing Costing Costing Sales $ 66000 $ 66000 $ 88000 $ 88000 $ 132000 $ 132000 Opening inventory 0 0 30000 0 0 0 production 48000 0 8000 0 48000 0 Closing 30000 0 0 0 20000 0 Less: Cost of Goods Sold 18000 24000 38000 32000 28000 48000 (Over)/Underapp. Fact. Over. 12000 6000 2000 8000 12000 12000 Total 30000 30000 40000 40000 40000 60000 Gross Margin (Loss) $ 36000 36000 $ 48000 48000 $ 92000 72000 Less: Fixed Factory Overhead 30000 30000 30000 30000 30000 30000 Selling and Admin. Exp. 4000 4000 4000 4000 4000 4000 Total 34000 34000 34000 34000 34000 34000 Net Income (Loss) $ 2000 $ 2000 $ 14000 $ 14000 $ 58000 $ 38000

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