Question

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 (4,900 units)			$171,500
Cost of goods sold:
Cost of goods manufactured (5,700 units)	$142,500
Inventory, November 30 (800 units)	(20,000)
Total cost of goods sold			122,500
Gross profit			$49,000
Selling and administrative expenses			30,110
Income from operations			$18,890

Assume the fixed manufacturing costs were $37,050 and the fixed selling and administrative expenses were $14,750.

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:
	$
		$

Answer 1

Variable cost of goods sold
Cost of goods sold as per Absorption					142500
Less: Fixed MFg oh absorbed (37050/5700*4900)					31850
Variable cost of goods sold					110650
Variable selling expenses
Total selling expenses				30110
Less: Fixed selling cost				14750
Variable selling expenses				15360
Variable Costing Income Statement
Sales				171500
Less: Variable cost
Variable cost of g oods sold			110650
Variable selling admin expennses			15360
Total Variable cost				126010
Contribution margin				45490
Lless: Fixed cost
Fixed Mfg Overheads			37050
Fixed selling admin expenses			14750
Total fixed cost				51800
Net income				-6310