Estimated Income Statements, using Absorption and Variable Costing

Prior to the first month of operations ending April 30, 2016, Jadelis Industries Inc. estimated the following operating results:

Sales (29,600 x $103)	$3,048,800
Manufacturing costs (29,600 units):
Direct materials	1,844,080
Direct labor	438,080
Variable factory overhead	204,240
Fixed factory overhead	242,720
Fixed selling and administrative expenses	66,000
Variable selling and administrative expenses	79,900

The company is evaluating a proposal to manufacture 32,800 units instead of 29,600 units, thus creating an ending inventory of 3,200 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 29,600 and 32,800 units are manufactured in the absorption costing format.

Jadelis Industries Inc.
Absorption Costing Income Statement
For the Month Ending April 30, 2016
	29,600 Units Manufactured	32,800 Units Manufactured
Sales	$	$
Cost of goods sold:
Cost of goods manufactured	$	$
Less inventory, April 30
Cost of goods sold	$	$
Gross profit	$	$
Selling and administrative expenses
Income from operations	$	$

a. 2. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the variable costing format.

Jadelis Industries Inc.
Variable Costing Income Statement
For the Month Ending April 30, 2016
	29,600 Units Manufactured	32,800 Units Manufactured
Sales	$	$
Variable cost of goods sold:
Variable cost of goods manufactured	$	$
Less inventory, April 30
Variable cost of goods sold	$	$
Manufacturing margin	$	$
Variable selling and administrative expenses
Contribution margin	$	$
Fixed costs:
Fixed factory overhead	$	$
Fixed selling and administrative expenses
Total fixed costs	$	$
Income from operations	$	$