Exercise 2-53 (Algo) Gross Margin and Contribution Margin Income Statements (LO 2-7)

Larcker Manufacturing's cost accountant has provided you with the following information for January operations.

Direct materials	$	35	per unit
Fixed manufacturing overhead costs	$	230,000
Sales price	$	205	per unit
Variable manufacturing overhead	$	19	per unit
Direct labor	$	27	per unit
Fixed marketing and administrative costs	$	185,000
Units produced and sold	$	5,500
Variable marketing and administrative costs	$	9	per unit

Required:

a. Prepare a gross margin income statement.

b. Prepare a contribution margin income statement.

Part A

Part B

2. Exercise 2-42 (Algo) Prepare Statements for a Manufacturing Company (LO 2-2, 4)

The following balances are from the accounts of Crabtree Machining Company:

	January 1 (Beginning)			December 31 (Ending)
Direct materials inventory	$	97,700		$	109,000
Work-in-process inventory		109,400			107,800
Finished goods inventory		42,300			46,800

Direct materials purchased during the year amount to $516,700, and the cost of goods sold for the year was $1,870,000.

Required:

Prepare a cost of goods sold statement.

Complete this question by entering your answers in the tabs below. Required A Required B Prepare a gross margin income statement. $ 1,127,500 445,500 Gross Margin Income Statement Sales revenue Fixed manufacturing overhead costs Variable manufacturing costs Gross margin Fixed marketing and administrative costs Variable marketing and administrative costs Operating profit 49,500 Complete this question by entering your answers in the tabs below. Required A Required B Prepare a contribution margin income statement. Contribution Margin Income Statement Sales revenue $ 1,127,500 Variable manufacturing costs 445,500 Variable marketing and administrative costs Contribution margin Fixed marketing and administrative costs Fixed manufacturing overhead costs Operating profit