Estimated Income Statements, using Absorption and Variable Costing

Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results:

Sales (16,000 x $55)	$880,000
Manufacturing costs (16,000 units):
Direct materials	534,400
Direct labor	126,400
Variable factory overhead	59,200
Fixed factory overhead	70,400
Fixed selling and administrative expenses	19,100
Variable selling and administrative expenses	23,200

The company is evaluating a proposal to manufacture 17,600 units instead of 16,000 units, thus creating an Inventory, October 31 of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

a. 1. Prepare an estimated income statement, comparing operating results if 16,000 and 17,600 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter 0.

Marshall Inc.
Absorption Costing Income Statement
For the Month Ending October 31
	16,000 Units Manufactured	17,600 Units Manufactured
	$	$
Cost of goods sold:
	$	$
	$	$
	$	$
Income from operations	$	$

a. 2. Prepare an estimated income statement, comparing operating results if 16,000 and 17,600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter 0.

Marshall Inc.
Variable Costing Income Statement
For the Month Ending October 31
	16,000 Units Manufactured	17,600 Units Manufactured
	$	$
Variable cost of goods sold:
	$	$
	$	$
	$	$
	$	$
Fixed costs:
	$	$
Total fixed costs	$	$
	$	$