Question

what is different line items on a Variable Costing Income Statement vs Absorption Costing Income Statement?

what is different line items on a Variable Costing Income Statement vs Absorption Costing Income Statement?

Homework Answers

Answer #1
Answer: Variable costing is also know as marginal costing. Under this only variable cost are allocated to units produced and fixed manufacturing cost is charged against revenue.
Income statement as per variable costing
Sales XXX
Less Variable production cost XXX
Less Variable selling and administrative cost XXX XXX
Contribuion margin XXX
Less Fixed manufacturing overheads XXX
Less Fixed selling & administraton cost XXX XXX
Net income XXX
Under absorption costing, both fixed and variable cost are allocated to each unit produced.
Income statement as per absorption costing
Sales XXX
Less: Variable production cost XXX
Less: Fixed manufacturing overheads XXX XXX
Gross profit XXX
Less: Variable selling and administrative cost XXX
Less: Fixed selling & administraton cost XXX XXX
Net income XXX
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Absorption vs. Variable Operating income is one of the most important items reported by a company....
Absorption vs. Variable Operating income is one of the most important items reported by a company. Depending on the decision-making needs of management, operating income can be determined using absorption costing or variable costing. Select whether the following characteristics are most often associated with absorption costing or variable costing. Required under generally accepted accounting principles (GAAP) Absorption Costing Often used for internal use in decision making Variable Costing Cost of goods manufactured includes only variable manufacturing costs Variable Costing Used...
Bluestone llc uses variable costing and absorption costing. In the variable costing income statement which of...
Bluestone llc uses variable costing and absorption costing. In the variable costing income statement which of the following is a period cost? a) direct materials b) direct labor c) both a and b d) neither a nor b
Describe the absorption costing income statement format. What is the benefit of using this income statement...
Describe the absorption costing income statement format. What is the benefit of using this income statement format for decision making purposes?
Exercise 19-9  Income statement under absorption costing and variable costing  P1  P2 Cool Sky reports the following costing data...
Exercise 19-9  Income statement under absorption costing and variable costing  P1  P2 Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $140 per unit. Manufacturing costs Direct materials per unit $60 Direct labor per unit $22 Variable overhead per unit $8 Fixed overhead for the year $528,000 Selling and administrative costs Variable selling and administrative cost per unit $11...
Example – Variable vs. Full Absorption Costing A company that uses a FIFO inventory system and...
Example – Variable vs. Full Absorption Costing A company that uses a FIFO inventory system and began operations in Year 1 has the following information.                                                            Year 1                         Year 2        Sales units                                       8,000                         10,000        Selling price                                      $45                              $46        Production units                           12,000                           8,000        Unit direct material cost                 $2.00                           $2.00        Unit direct labor cost                      $1.00                           $1.00        Unit commission cost                       $.50                             $.50        Annual Fixed Overhead           $180,000                     $180,000        Annual Fixed S,G,&A              $140,000                     $150,000 1.    What are...
Problem 06-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez...
Problem 06-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Sales (80,000 units × $45 per unit) $ 3,600,000 Cost of goods sold Beginning inventory $ 0 Cost of goods manufactured (100,000 units × $25 per unit) 2,500,000 Cost of goods available for sale 2,500,000 Ending inventory...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $44.60 per unit) $ 1,739,400 Cost of goods sold (39,000 units × $22 per unit) 858,000 Gross margin 881,400 Selling and administrative expenses 409,500 Net operating income $ 471,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...
QUESTION 39 The income statement is organized by ________ under absorption costing. variable costs only fixed...
QUESTION 39 The income statement is organized by ________ under absorption costing. variable costs only fixed costs only product and period costs period costs only
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:    Whitman Company Income Statement   Sales (42,000 units × $43.10 per unit) $ 1,810,200   Cost of goods sold (42,000 units × $21 per unit) 882,000   Gross margin 928,200   Selling and administrative expenses 441,000   Net operating income $ 487,200    The company’s selling and administrative expenses consist of $315,000 per year in fixed expenses and $3 per unit sold in...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $42.60 per unit) $ 1,661,400 Cost of goods sold (39,000 units × $21 per unit) 819,000 Gross margin 842,400 Selling and administrative expenses 409,500 Net operating income $ 432,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...