The following information is taken from the records of the Kingland Manufacturing Company for the year ending
Question:
The following information is taken from the records of the Kingland Manufacturing Company for the year ending 31 December 20X1. There were no beginning or ending inventories.
1. Prepare a contribution income statement and an absorption income statement. If you are in doubt about any cost behaviour pattern, decide on the basis of whether the total cost in question will fluctuate substantially over a wide range of volume. Prepare a separate supporting schedule of indirect manufacturing costs subdivided between variable and fixed costs.
2. Suppose that all variable costs fluctuate directly in proportion to sales and that fixed costs are unaffected over a wide range of sales. What would operating income have been if sales had been €12 million instead of €13 million? Which income statement did you use to help get your answer? Why?
Step by Step Answer:
Introduction To Management Accounting
ISBN: 9780273737551
1st Edition
Authors: Alnoor Bhimani, Charles T. Horngren, Gary L. Sundem, William O. Stratton, Jeff Schatzberg