=+Sales (100,000 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,650,000 Variable cost of goods sold:

Variable cost of goods manufactured (120,000 units 

$12 per unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,440,000 Less ending inventory (20,000 units  $12 per unit) . . . . . . . . . . . . 240,000 __________ Variable cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000 __________ Manufacturing margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 450,000 Variable selling and administrative expenses . . . . . . . . . . . . . . . . . . . 16,000 __________ Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 434,000 Fixed costs:

Fixed manufacturing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,000 Fixed selling and administrative expenses . . . . . . . . . . . . . . . . . . . 28,000 70,000 __________ __________ Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 364,000 __________ __________ Prepare an absorption costing income statement.

Appendix