During the first month of operations ended July 31, YoSan Inc. manufactured 11,1
ID: 2791347 • Letter: D
Question
During the first month of operations ended July 31, YoSan Inc. manufactured 11,100 flat panel televisions, of which 10,400 were sold. Operating data for the month are summarized as follows:
Required:
1. Prepare an income statement based on the absorption costing concept.
Feedback
1. Sales - (cost of goods manufactured - ending inventory*) = Gross profit; gross profit - selling and administrative expenses = income from operations.
* (Manufactured Units - Sold units) x (total manufacturing costs/manufactured units)
Learning Objective 1 and Learning Objective 2.
2. Prepare an income statement based on the variable costing concept.
Sales $1,872,000 Manufacturing costs: Direct materials $943,500 Direct labor 277,500 Variable manufacturing cost 244,200 Fixed manufacturing cost 122,100 1,587,300 Selling and administrative expenses: Variable $145,600 Fixed 67,000 212,600Explanation / Answer
Answer 1.
YoSan Inc.
Absorption Costing Income Statement
For the Month Ended July 31
Sales
1872000
Cost of goods sold:
Cost of goods manufactured
1587300
Inventory, July 31
700
Total cost of goods sold
1587300
Gross profit
171192.792792793
Selling and administrative expenses
212600
Income from operations
-41407.2072072072
Answer 2.
YoSan Inc.
Variable Costing Income Statement
For the Month Ended July 31
Sales
18272000
Variable cost of goods sold:
Variable cost of goods manufactured
244200
Inventory, July 31
700
Total variable cost of goods sold
244200
Manufacturing margin
18027800
Variable selling and administrative expenses
145600
Contribution margin
17882200
Fixed costs:
Fixed manufacturing costs
1343100
Fixed selling and administrative expenses
67000
Total fixed costs
1410100
Income from operations
16472100
YoSan Inc.
Absorption Costing Income Statement
For the Month Ended July 31
Sales
1872000
Cost of goods sold:
Cost of goods manufactured
1587300
Inventory, July 31
700
Total cost of goods sold
1587300
Gross profit
171192.792792793
Selling and administrative expenses
212600
Income from operations
-41407.2072072072
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