Home Chegg.com Show Ma Absorption and Variable Costing Income Stabements for Two

Question

Home Chegg.com Show Ma Absorption and Variable Costing Income Stabements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 28,600 hats, of which 26,900 were sold. Operating data for the month are summartzed as ales $258,240 Manufacturing costs Direct materials $157,300 Vaniable manufacturing cost Fixed manufacturing co 0,020 17,160 234,520 Selling and administrantive expenses: $13,450 9.820 2120 During August, Head Gear Inc. manulactured 23,200 designer hats and soid 26,900 hats. Operating data for August are summarined as follows: 135,600 35,280 17,640 17,160 208,680 vanable manufacturing cost Fixed manufacturing cost Selling and administrative expenses 20

Explanation / Answer

3a)For July, Income from operations reported under Variable costing is less than Absorption costing due to part of fixed manufacturing costs that are expensed.

3b) complete question is not provided, sorry.

Income Statement - Absorption Costing for July & Aug: 31-Jul 31-Aug Sales 258240 258240 Less: Manufacturing cost: Direct material 157300 138600 Direct labor 40040 35380 Variable manufacturing cost 20020 17640 Fixed manufacturing cost 17160 17160 Total 234520 208780 Add/Less: Closing stock (28600-26900) -13940 13940 Cost of Goods Sold 220580 222720 Gross profit 37660 35520 Less: expenses: Selling and admis -23270 -23270 NOI 14390 12250 Income Statement - Variable Costing for July & Aug: 31-Jul 31-Aug Sales 258240 258240 Less: Variable cost: Direct material 157300 138600 Direct labor 40040 35380 Variable manufacturing cost 20020 17640 Variable selling and admin cost 13450 13450 Total variable costs 230810 205070 Add/Less: Closing stock (28600-26900) -13719 13719 Net variable cost 217091 218789 Contribution 41149 39451 Less: Fixed costs: Manufacturing 17160 17160 Selling and admis 9820 9820 Total fixed costs 26980 26980 NOI 14169 12471

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