5 Prepare an income statement using the contribution margin approach LO 11-3

AJ Manufacturing Company incurred $56,000 of fixed product cost and $44,800 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,800 of fixed selling and administrative costs and $14,200 of variable selling and administrative costs. The company sold all of the units it produced for $184,000.

a.	Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).

CREATE AJ MANUFACTURING COMPANY INCOME STATEMENT USING THE TERMS LISTED BELOW:

- COSTS OF GOODS

- FIXED COSTS

- REVENUE

- SELLING AND ADMINISTRATION

- VARIABLE COST

- GROSS MARGIN OR GROSS LOSS

- NET INCOME OR NET LOSS

b.	Prepare an income statement using the contribution margin approach.

CREATE AJ MANUFACTURING COMPANY INCOME STATEMENT USING THE CONTRIBUTION MARGIN APPROACH AND TERMS LISTED BELOW:

- COSTS OF GOODS

- FXED COSTS

- REVENUE

- SELLING AND ADMINISTRATION

- VARIABLE COST

- GROSS MARGIN OR GROSS LOSS

- NET INCOME OR NET LOSS