The Renfroe Company uses a standard costing system. Denominator volume for the years 20x8 and 20x9 was 200,000 units per year. The fixed overhead volume variance is expensed to cost of goods sold at the end of the year.

 

The following are actual data for the year 20x9:

 

Sales	235,000 units
Opening inventory	50,000 units
Ending inventory	20,000 units
Selling price	$60
Variable costs per unit (at standard) -
Manufacturing	$15
Selling and administrative	$6
Fixed costs (in total) -
Manufacturing	$4,000,000
Selling and administrative	1,500,000

 

All actual costs were equal to budgeted costs. The standard costs have not changed since the beginning of 20x8.

 

Required -

 

a.       Prepare an income statement in proper form using absorption costing.

b.       Prepare an income statement in proper form using variable/direct costing.

c.       Reconcile the difference.

Answer rating: 100% (QA)

a Income Statement using Absorption Costing Sales 235000 units 60 14100000 Cost of Goods Sold Openin... View the full answer