Question

Variable Costing Income Statement On November 30, the end of the first month of operations, Weatherford...

Variable Costing Income Statement On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept: Weatherford Company Absorption Costing Income Statement For the Month Ended November 30 Sales (2,700 units) $54,000 Cost of goods sold: Cost of goods manufactured (3,100 units) $43,400 Inventory, November 30 (400 units) (5,600) Total cost of goods sold 37,800 Gross profit $16,200 Selling and administrative expenses 9,410 Income from operations $6,790 Assume the fixed manufacturing costs were $10,416 and the fixed selling and administrative expenses were $4,610. Prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. Weatherford Company Variable Costing Income Statement For the Month Ended November 30 $ Variable cost of goods sold: $ $ $ Fixed costs: $ $

Homework Answers

Answer #1

(i) Selling and administrative expenses = $9,410

Fixed selling and administrative expenses = $4,610

Hence, variable selling and administrative expenses = Selling and administrative expenses - Fixed selling and administrative expenses

= 9,410 - 4,610

= $4,800

(ii) Cost of goods manufactured = $43,400

Fixed manufacturing costs = $10,416

Hence, variable Cost of goods manufactured = Cost of goods manufactured - Fixed manufacturing costs

= 43,400 - 10,416

= $32,984

Hence, inventory, November 30 (as per variable costing) = 32,984 x 400/3,100

= $4,256

Hence, variable cost of goods sold = variable Cost of goods manufactured - inventory, November 30 (as per variable costing)

= 32,984 - 4,256

= $28,728

Variable Costing Income Statement

Sales 54,000
Variable cost of goods sold 28,728
Variable selling and administrative expenses 4,800
Total variable costs - 33,528
Contribution margin 20,472
Fixed manufacturing costs - 10,416
Fixed selling and administrative expenses - 4,610
Income from operations $5,446
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