1-

Variable Costing Income Statement

The following data were adapted from a recent income statement of The Bluth Company:

	(in millions)
Sales	$206,140
Operating costs:
Cost of products sold	$(98,950)
Marketing, administrative, and other expenses	(65,960)
Total operating costs	$(164,910)
Operating income	$41,230

Assume that the variable amount of each category of operating costs is as follows:

			(in millions)
Cost of products sold			$55,660
Marketing, administrative, and other expenses			26,800

a. Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period.

1B-Inventory Valuation under Absorption Costing and Variable Costing

At the end of the first year of operations, 5,400 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows:

Direct materials	$36.40
Direct labor	18.20
Fixed factory overhead	5.90
Variable factory overhead	5.20

Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept.

Absorption costing	$
Variable costing	$

Variable Costing Income Statement The following data were adapted from a recent income statement of The Bluth Company: (in millions) $206,140 Sales Operating costs: Cost products sold $(98,950) (65,960) Marketing, administrative, and other expenses Total operating costs $(164,910) $41,230 Operating income Assume that the variable amount of each category of operating costs is as follows: (in millions) Cost of products sold $55,660 Marketing, administrative, and other expenses 26,800 a. Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period. The Bluth Company Variable Costing Income Statement (assumed) (in millions Sales Variable cost of products sold Manufacturing margin Variable marketing, administrative, and other expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed marketing, administrative, and other expenses Total fixed costs Operating income v V Inventory Valuation under Absorption Costing and Variable Costing At the end of the first year of operations, 5,400 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials $36.40 Direct labor 18.20 Fixed factory overhead 5.90 Variable factory overhead 5.20 Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept. Absorption costing Variable costing