Question

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

1	Sales (25,000 units)		$3,500,000.00
2	Cost of goods sold:
3	Cost of goods manufactured (29,200 units)	$2,628,000.00
4	Inventory, November 30 (4,200 units)	(378,000.00)
5	Total cost of goods sold		2,250,000.00
6	Gross profit		$1,250,000.00
7	Selling and administrative expenses		150,000.00
8	Income from operations		$1,100,000.00

If the fixed manufacturing costs were $262,800 and the fixed selling and administrative expenses were $125,000, prepare an income statement according to the variable costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter all amounts as positive numbers. Round your cost per unit answer to two decimal places and final answers to nearest whole dollar.

Answer 1

Variable costing income statement :

Sales		3500000
Less: Variable cost of goods sold
Cost of goods manufactured	2628000
Less: Fixed manufacturing cost	-262800
Variable cost of goods manufactured	2365200
Inventory, November 30 (4,200 units)	-340200
Total variable cost of goods sold		2025000
Manufacturing margin		1475000
Variable selling and administrative		25000
Contribution margin		1450000
Fixed cost
Fixed manufacturing cost	262800
Fixed selling and administrative	125000
Total fixed cost		387800
Income from operation		1062200