Question: I am having trouble with setting up this income statement based on absorption costs. Income Statements- Absorption Costing and Variable Costing Gallatin County Motors Inc.
I am having trouble with setting up this income statement based on absorption costs.
Income Statements- Absorption Costing and Variable Costing
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July:
| Sales (9,000 units) | $900,000 | |||
| Production costs (12,000 units): | ||||
| Direct materials | $444,000 | |||
| Direct labor | 213,600 | |||
| Variable factory overhead | 106,800 | |||
| Fixed factory overhead | 70,800 | 835,200 | ||
| Selling and administrative expenses: | ||||
| Variable selling and administrative expenses | $129,500 | |||
| Fixed selling and administrative expenses | 50,100 | 179,600 |
Preparing an income statement according to the absorption costing concept.
| Cost of goods sold,Direct laborDirect materials,Fixed factory overhead costs,Sales | $- Select - |
| Cost of goods soldGross profitSalesSelling and administrative expensesVariable factory overhead | - Select - |
| Direct laborDirect materialsGross profitFixed factory overhead costsSales | $- Select - |
| Cost of goods soldFixed factory overhead costsSalesSelling and administrative expensesVariable factory overhead | - Select - |
| Operating incomeLoss from operations | $- Select - |
b. Preparing an income statement according to the variable costing concept.
| Contribution marginFixed selling and administrative expensesManufacturing marginSalesVariable selling and administrative expenses | $- Select - | |
| Fixed factory overhead costsFixed selling and administrative expensesManufacturing marginVariable cost of goods soldVariable selling and administrative expenses | - Select - | |
| Contribution marginManufacturing marginSalesVariable cost of goods soldVariable selling and administrative expenses | $- Select - | |
| Fixed factory overhead costsFixed selling and administrative expensesManufacturing marginVariable cost of goods soldVariable selling and administrative expenses | - Select - | |
| Contribution marginFixed selling and administrative expensesManufacturing marginSalesVariable selling and administrative expenses | $- Select - | |
| Fixed costs: | ||
| Contribution marginFixed factory overhead costsManufacturing marginSalesVariable cost of goods sold | $- Select - | |
| Fixed selling and administrative expensesManufacturing marginSalesVariable cost of goods soldVariable selling and administrative expenses | - Select - | |
| Contribution marginOperating incomeManufacturing marginSalesTotal fixed costs | - Select - | |
| Operating incomeLoss from operations | $- Select - |
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