Question

On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept:

Joplin Company Absorption Costing Income Statement For the Month Ended April 30
Sales (3,800 units)			$125,400
Cost of goods sold:
Cost of goods manufactured (4,400 units)	$101,200
Inventory, April 30 (600 units)	(13,800)
Total cost of goods sold			(87,400)
Gross profit			$38,000
Selling and administrative expenses			(21,640)
Operating income			$16,360

If the fixed manufacturing costs were $23,276 and the fixed selling and administrative expenses were $10,600, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.

Answer 1

Variable Costing Income Statement
For the Month Ended April 30
Sales		125,400
Variable Cost of goods sold:
Variable Cost of goods manufactured (101,200-23276)	77,924
Inventory, April 30 (600*77,924/4,400)	(10,626)
Total Variable Cost of goods sold		67,298
Manufacturing margin		58,102
Variable Selling and administrative expenses		10,600
Contribution margin		47,502
Fixed costs:
Fixed manufacturing costs	23,276
Fixed selling and administrative expenses	10,600
Total Fixed costs		33,876
Income from operations		13,626