Do Ho k JORGE CASTRO ACG2071 REF 11366 THURSDAY ORGE CASTRO 1 1/9/17 1:58 PM Hom

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Do Ho k JORGE CASTRO ACG2071 REF 11366 THURSDAY ORGE CASTRO 1 1/9/17 1:58 PM Homework: Chapter 8 Lab Score: 0 of 1 pt 1 of 1 (O complete) Hw Score: 0%, 0 of 1 pt P6-67B (similar to) -Question Help * Violins Galore produces student-grade violins for beginning violin students. The company produced 2,200 violins in its first month of operations. At month-end, 750 finished violins remained unsold. There was no inventory in work in process. Violins were sold for $112.50 each. Total costs from the month are as follows: E (Click on the icon to view the data.) The company prepares traditional (absorption costing) income statements for its bankers. Galore would also like to prepare contribution margin income statements for management use. Compute the following amounts that would be shown on these income statements Requirement 1. Gross Profit 8 Clear All

Explanation / Answer

Variable costing Product cost Direct material 54.9 Direct labor 15.9 Variable manufacturing overhead 13.2 Unit product cost 84 Units manufactured 2200 Units sold 1,450 Income statement Sales revenue 163125 Less Variable expense Variable cost of goods sold 121800 Variable selling and admin expense 10000 Total variable expense 131800 Contribution margin 31325 Less Fixed cost Fixed manufacturing expense 41800 Fixed Admin expense 11900 Total fixed expenses 53700 Net operating income -22375 Absorption costing Product cost Direct material 54.9 Direct labor 15.9 Variable manufacturing overhead 13.2 Fixed manufacturing (41800/2200) 19 Total product cost 103 Units sold 1,450 Income statement 1st year Sales revenue 163125 cost of goods sold Beginning inventory 0 cost of goods manufactured 226600 Add Goods available for sale 226600 Ending inventory 77250 Less Cost of goods sold 149350 Gross profit 13775 Selling and admin expenses Less Variable selling and admin expense 10000 Fixed Admin expense 11900 Total Selling and admin expenses 21900 Net operating income -8125

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