Question

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?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Format of absorption costing

Net sales. XXX

Less cost of goods sales

Opening inventory. XXX

Direct expense

(material, labor) XXX

Variable overhead XXX

Fixed overhead. XXX

Less closing inventory (XXX).    XXX.

Total Cost of goods sold. XXX

Cost per unit = Cost of goods sold / No of itme sold

Benifits of absorption costing income statement for decision making

Absorption costing consider both type of cost ( Fixed and variable). This cost is more realistic as compare to variable costing. Absorption costing more accurately track profit than variable costing. Absorptio costing is more suitable for preparation of account. Also this method is acceptable under GAAP (journal Accepted Accounting principles) .

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the...
Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the internal decision-making and compare with the traditional income statement prepared by absorption costing that is used for the external reporting. Prepare the two income statements assuming the following 1- There is no inventory. 2- There is beginning inventory. 3- There is end of period inventory 4- Explain and comment on the reasons for differences in the results
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?
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...
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...
Prepare an income statement based on the absorption costing concept
Prepare an income statement based on the absorption costing concept
Assignment Question(s):​​​​​​(Marks5) Q1. Give a numerical example for Variable Costing Contribution Format Income Statement that is...
Assignment Question(s):​​​​​​(Marks5) Q1. Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the internal decision-making and compare with the traditional income statement prepared by absorption costing that is used for the external reporting. Prepare the two income statements assuming the following (2.5 marks) 1- There is no inventory. 2- There is beginning inventory. 3- There is end of period inventory 4- Explain and comment on the reasons for differences in the results Answer: Q2....
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 (40,000 units × $43.10 per unit) $ 1,724,000 Cost of goods sold (40,000 units × $24 per unit) 960,000 Gross margin 764,000 Selling and administrative expenses 500,000 Net operating income $ 264,000 The company’s selling and administrative expenses consist of $300,000 per year in fixed expenses and $5 per unit sold in variable expenses. The...
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 (40,000 units × $44.10 per unit) $ 1,764,000 Cost of goods sold (40,000 units × $22 per unit) 880,000 Gross margin 884,000 Selling and administrative expenses 420,000 Net operating income $ 464,000 The company’s selling and administrative expenses consist of $300,000 per year in fixed expenses and $3 per unit sold in variable expenses. The...
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 × $43.10 per unit) $ 1,680,900 Cost of goods sold (39,000 units × $21 per unit) 819,000 Gross margin 861,900 Selling and administrative expenses 448,500 Net operating income $ 413,400 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT