Question

Sullivan Equipment Company

Variable Costing Income Statement
For the Month Ended March 31
Sales (14,200 units) $653,200
Variable cost of goods sold:
Variable cost of goods manufactured $288,000
Inventory, March 31 (1,800 units) (32,400)
Total variable cost of goods sold 255,600
Manufacturing margin $397,600
Variable selling and administrative expenses 170,400
Contribution margin $227,200
Fixed costs:
Fixed manufacturing costs $64,000
Fixed selling and administrative expenses 42,600
Total fixed costs 106,600
Income from operations $120,600
Prepare in income statement under absorption costing.

Answer 1

Income statement under absorption costing

Sales (14,200 units) $653,200

Less Cost of Goods Sold

Opening Inventory $0

Add Cost of Goods Manufactured $352,000

Less Closing Inventory (1,800 units × $22.00) ($39,600) ($312,400)

Gross Profit $340,800

Less Expenses :

Variable selling and administrative expenses ($170,400)

Fixed selling and administrative expenses ($42,600)

Net Operating Income / (Loss) $127,800

Step-by-step explanation:

Manufacturing Cost Schedule :

Variable cost of goods manufactured $288,000

Add Fixed manufacturing costs $64,000

Total Manufacturing Cost $352,000

Units Manufactured :

Units Sold 14,200

Add Closing Stock 1,800

Less Opening Stock 0

Units Manufactured 16,000

Cost per unit manufactured = $352,000 / 16,000

= $22.00