On January 1 of the current year, Townsend Co. began operations. It operated its plant at 100% capacity during January. The following data summarizes the results for January

	Units
Production	50,000
Sales ($18 per unit)	42,000
Inventory, January 31	8,000
Manufacturing costs:
Variable	$ 575,000
Fixed	80.000
Total	$655,000
Selling and administration expenses:
Variable	$35,000
Fixed	10,500
Total	$ 45,500

	Required:
(a)	Prepare an income statement using absorption cost.*
(b)	Prepare an income statement using variable costs.*
	*See lists of labels and amount descriptions for exact wording of answer options for text entries. Be sure to complete the declaration header. “Less” or “More” will automatically appear if necessary. You will not need to enter a colon (:) in financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

X

Absorption Costs Income Statement

Prepare an income statement using the absorption cost. See the label lists and quantity descriptions for the exact text of the answer options for text entries. Be sure to complete the declaration header. “Less” or “More” will automatically appear if necessary. You will not need to enter a colon (:) in financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Townsend Co.

Absorption Costs Income Statement

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2	Cost of goods sold:
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Hang tags

Fixed costs

For the month ended January 31, 20--

Quantity Descriptions

Contribution margin

cost of manufactured goods

cost of goods sold

Fixed manufacturing costs

Fixed selling and administrative expenses

Gross profit

operating income

Inventory, January 31, 20--

manufacturing margin

Sales

Selling and administrative expenses

Variable cost of manufactured goods

variable cost of goods sold

Variable selling and administrative expenses

Prepare an income statement using the absorption cost. See the label lists and quantity descriptions for the exact text of the answer options for text entries. Be sure to complete the declaration header. “Less” or “More” will automatically appear if necessary. You will not need to enter a colon (:) in financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Townsend Co.

Absorption Costs Income Statement

1
2	Cost of goods sold:
3
4
5
6
7
8

Prepare an income statement using the absorption cost. See the label lists and quantity descriptions for the exact text of the answer options for text entries. Be sure to complete the declaration header. “Less” or “More” will automatically appear if necessary. You will not need to enter a colon (:) in financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Townsend Co.

Absorption Costs Income Statement

1
2	Cost of goods sold:
3
4
5
6
7
8

X

Variable Cost Income Statement

Prepare an income statement using variable cost. See the label lists and quantity descriptions for the exact text of the answer options for text entries. Be sure to complete the declaration header. “Less” or “More” will automatically appear if necessary. You will not need to enter a colon (:) in financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Townsend Co.

Variable Cost Income Statement

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2	Variable cost of goods sold:
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5
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7
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12

Answer rating: 100% (QA)

1 Absorption Costing Income Statement Townsend Co Absorption Costing Income Statement For the Month Ended January Amount Sales 42000 Units x 18 756000 ... View the full answer