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On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

Sales (16,000 units)					$1,248,000
Cost of goods sold:
	Cost of goods manufactured		$940,500
	Less ending inventory (3,000 units)		148,500
	Cost of goods sold				792,000
Gross profit					$456,000
Selling and administrative expenses					88,000
Income from operations					$368,000

Question Content Area

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $57,000 and the variable selling and administrative expenses were $40,000. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

Rhys Company Income Statement-Variable Costing For the Month Ended July 31

Sales	1248000
Variable cost of goods sold:
Variable cost of goods manufactured	883500
Less ending inventory	139500
Variable cost of goods sold		744000
Manufacturing margin		fill in the blank
Variable selling and administrative expenses		40000
Contribution margin		fill in the blank
Fixed costs:
Fixed manufacturing costs	57000
Fixed selling and administrative expenses	48000	105000
Income from operations		fill in the blank

b. Reconcile the absorption costing income from operations of $368,000 with the variable costing income from operations determined in (a).

blank Reconciliation of Absorption and Variable Costing Income blank

Absorption costing income from operations	$fill in the blank 796a3d01703a058_1
Variable costing income from operations	fill in the blank 796a3d01703a058_2
Difference	$fill in the blank 796a3d01703a058_3