1. Complete the following income statements using absorption costing Production

Question

1. Complete the following income statements using absorption costing Production volume 300 320 ost of goods sold Direct materials per unit Direct labor per unit Variable overhead per Fixed overhead per unit workstations workstations 760 320 100 24,000 25,180 228,000 S 96.000 30.000 24,000 378,000 S unit Cost of goods sold per unit Number of workstations sold Total cost of goods sold 300 $ 113,400,000 BUSINESS SOLUTIONS Absorption Costing Income Statements Production volume 300 320 Sales v Sales Cost of goods manufactured Cost of goods sold Selling general and administrative expenses Gross margin Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)? olume 300 Workstations workstations workstations 0 $

Explanation / Answer

Production volume Cost of goods sold 300work 320 work direct materials cost per unit $          760.00 $            760.00 direct labor per unit $          320.00 $            320.00 Variable overhead $          100.00 $            100.00 Fixed overhead per unit $            80.00 $              75.00 cost of goods sold per unit $      1,260.00 $        1,255.00 Number of workstations sold $          300.00 $            300.00 total cost of goods sold $ 378,000.00        376,500.00 Absortion costing income statements Producstion volume Sales volume 300 workstations 300 320 Sales 1,140,000 1,140,000 cost of goods manufactured $ (378,000.00) (376,500.00) Gross profit 762,000 763,500 Selling and administrative expenses -12,400 -12,400 Net income 749,600 751,100 yes Variable costing income statement 300 work 300 work Sales    1,140,000.00    1,140,000.00 less: direct materials     (228,000.00)     (228,000.00) Direct labor        (96,000.00)        (96,000.00) Variable overhead        (30,000.00)        (30,000.00) Variable selling expenses          (9,000.00)          (9,000.00) contribution margin        777,000.00        777,000.00 less : fixed expenses Fixed manufacturing cost        (24,000.00)        (24,000.00) Fixed selling expenses          (3,400.00)          (3,400.00) Net income        749,600.00        749,600.00 it can increase net income only if the increased production is sold

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