Question

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (14,500 units) $2,030,000 Production costs (19,000 units): Direct materials $984,200 Direct labor 473,100 Variable factory overhead 235,600 Fixed factory overhead 157,700 1,850,600 Selling and administrative expenses: Variable selling and administrative expenses $286,800 Fixed selling and administrative expenses 111,000 397,800 If required, round interim per-unit calculations to the nearest cent. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales $ Variable cost of goods sold Manufacturing margin $ Variable selling and administrative expenses Contribution margin $

Answer 1

Prepare income statement under variable costing

Sales		2030000
Variable cost of goods sold
Direct material	984200
Direct labor	473100
Variable factory overhead	235600
Total Variable cost of goods manufactured	1692900
Less: Ending goods inventory	-400950
Variable cost of goods sold		1291950
Manufacturing margin		738050
Variable selling and administrative expense		286800
Contribution margin		451250
Fixed cost
Fixed manufacturing cost	157700
Fixed selling and administrative	111000
Total fixed cost		268700
Net operating income		182550