Cost/unit$ 50.00 Year 1Year 2 Sales (in units)2,500 2,500 Production (in units)3,000 2,000 Production Costs: Variable manufacturing costs$ 21,000.00 $ 14,000.00 $ 35,000.00 Fixed manufacuring overhead$ 42,000.00 $ 42,000.00 $ 35,000.00 Selling and administrative costs: Variable $ 25,000.00 $ 25,000.00 Fixed $ 20,000.00 $ 20,000.00 Absorption Costing Year 1Year 2 Variable manuf cost/unit$ 7.00 $ 7.00 Fixed manufactuing/unit$ 14.00 $ 21.00 Varriable Selling and Admin/unit$ 10.00 $ 10.00 Income Statement Sales Revenue$ 125,000.00 $ 125,000.00 Less GOGS: Beginning Finished goods inv.$ - $ 10,500.00 Cost of Goods Manufactured$ 63,000.00 $ 56,000.00 Cost of Goods Available for sale$ 63,000.00 $ 66,500.00 Ending finished goods inventory$ 10,500.00 $ - COGS$ 52,500.00 $ 66,500.00 $ 119,000.00 Gross Margin$ 72,500.00 $ 58,500.00 Less Selling & Administrative Variable$ 25,000.00 $ 25,000.00 Fixed$ 20,000.00 $ 20,000.00 Operating income$ 27,500.00 $ 13,500.00 $ 41,000.00 Variable Costing Year 1Year 2 Sales Revenue$ 125,000.00 $ 125,000.00 Less Variable Expenses: Beginning Finished goods inv.$ - $ 3,500.00 Cost of Goods Manufactured$ 21,000.00 $ 14,000.00 Cost of Goods Available for sale$ 21,000.00 $ 17,500.00 Ending finished goods inventory$ 3,500.00 $ - COGS$ 17,500.00 $ 17,500.00 Variable SG&A$ 25,000.00 $ 25,000.00
Total Variable Cost$ 42,500.00 $ 42,500.00 Contribution Margin$ 82,500.00 $ 82,500.00 Less Fixed Expenses Fixed MOH$ 42,000.00 $ 42,000.00 Fixed SG&A$ 20,000.00 $ 20,000.00 Operating Income$ 20,500.00 $ 20,500.00 $ 41,000.00
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