(20 pts) A company had the following data (in $1,000s) for 2016. Beginning and e

Question

(20 pts) A company had the following data (in $1,000s) for 2016. Beginning and ending inventory Direct material used Direct labor Supplies Utilities-variable portion Utilities-fixed portion Indirect labor - Variable portion Indirect labor- fixed portion Depreciation Property taxes Supervisory salaries In addition to the above, selling expenses were $300,000 (of which $60,000 were variable) s. None $400 330 20 40 12 40 200 20 50 and general administrative expenses were $144,000 (of which $23,000 were variable). Sales were $1.8 million. a) Prepare an income statement using the contribution approach b) Prepare an income statement using the absorption approach Conch offers to buy 100

Explanation / Answer

a)

b)

Dean Corporation Income Statement (Variable costing) Sales 1,800,000 Variable Expenses Direct Material 400,000 Direct Labour 330,000 Supplies     20,000 Utilities - variable portion     40,000 Indirect labour - variable portion     90,000 Selling expense -variable portion     60,000 General administrative expense - variable portion     23,000 Total Variable expenses      963,000 Contribution margin      837,000 Fixed Expenses Utilities - fixed portion     12,000 Indirect labour - fixed portion     40,000 Selling expense -fixed portion 240,000 General administrative expense - fixed portion 121,000 Total Fixed Expenses      413,000 net operating income (Loss)      424,000

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