Problem 22-6A Jackson Company produces plastic that is used for injection-moldin
ID: 2605971 • Letter: P
Question
Problem 22-6A Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 4,000 tons of plastic and sold 3,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000 variable manufacturing costs were 15% of the sales price of units produced variable selling expenses were 10% of the selling price of u its sold fixed manufacturing costs were $2,800,000, and fixed administrative expenses were $500,000. Prepare income statements for each year using variable costing. ACKSON COMPANY Income Statement Variable CostingExplanation / Answer
Answer
2016
2017
Units Produced
4000
3500
Units Sold
3500
4000
Sales Revenue
7000000
8000000
Less: Variable cost
Variable manufacturing Cost
1050000
1200000
Variable Selling expenses
700000
800000
Total Variable cost
1750000
2000000
Contribution mArgin
5250000
6000000
Less: Fixed Costs
Manufacturing cost
2800000
2800000
Administrative expenses
500000
500000
Total Fixed Expenses
3300000
3300000
Net Income/(Loss)
1950000
2700000
2016
2017
Units Produced
4000
3500
Units Sold
3500
4000
Sales Revenue
7000000
8000000
Less: Cost of Goods Sold
Variable manufacturing Cost
1050000
1200000
Variable Selling expenses
700000
1750000
800000
2000000
Opening Stock
412500
Manufacturing cost
2450000
2800000
Administrative expenses
437500
2887500
500000
3712500
Total Cost
4637500
5712500
Net Income/(Loss)
2362500
2287500
2016
2017
Variable Costing Net Income
1950000
2700000
Fixed manufacturing Overhead expensed with Variable Costing
3300000
3300000
Less: fixed manufacturing overhead with Absorption costing
-2887500
-3712500
Difference
412500
-412500
Absorption costing Net Income
2362500
2287500
2016
2017
Units Produced
4000
3500
Units Sold
3500
4000
Sales Revenue
7000000
8000000
Less: Variable cost
Variable manufacturing Cost
1050000
1200000
Variable Selling expenses
700000
800000
Total Variable cost
1750000
2000000
Contribution mArgin
5250000
6000000
Less: Fixed Costs
Manufacturing cost
2800000
2800000
Administrative expenses
500000
500000
Total Fixed Expenses
3300000
3300000
Net Income/(Loss)
1950000
2700000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.