Question

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows:

Whitman Company
Income Statement
Sales (38,000 units × $44.10 per unit) $ 1,675,800
Cost of goods sold (38,000 units × $20 per unit) 760,000
Gross margin 915,800
Selling and administrative expenses 437,000
Net operating income $ 478,800

The company’s selling and administrative expenses consist of $285,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $20 unit product cost given above is computed as follows:

Direct materials $ 9
Direct labor 4
Variable manufacturing overhead 3
Fixed manufacturing overhead ($188,000 ÷ 47,000 units) 4
Absorption costing unit product cost $ 20

Required:

1. Redo the company’s income statement in the contribution format using variable costing.

2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (38,000 units × $44.10 per unit) $ 1,675,800 Cost of goods sold (38,000 units × $25 per unit) 950,000 Gross margin 725,800 Selling and administrative expenses 475,000 Net operating income $ 250,800 The company’s selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (38,000 units × $42.60 per unit) $ 1,618,800 Cost of goods sold (38,000 units × $23 per unit) 874,000 Gross margin 744,800 Selling and administrative expenses 437,000 Net operating income $ 307,800 The company’s selling and administrative expenses consist of $285,000 per year in fixed expenses and $4 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units × $44.10 per unit) $ 1,764,000 Cost of goods sold (40,000 units × $22 per unit) 880,000 Gross margin 884,000 Selling and administrative expenses 420,000 Net operating income $ 464,000 The company’s selling and administrative expenses consist of $300,000 per year in fixed expenses and $3 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below: Whitman Company Income Statement Sales (38,000 units × $43.10 per unit) $ 1,637,800 Cost of goods sold (38,000 units × $25 per unit) 950,000 Gross margin 687,800 Selling and administrative expenses 475,000 Net operating income $ 212,800 The company’s selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses....
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:    Whitman Company Income Statement   Sales (42,000 units × $43.10 per unit) $ 1,810,200   Cost of goods sold (42,000 units × $21 per unit) 882,000   Gross margin 928,200   Selling and administrative expenses 441,000   Net operating income $ 487,200    The company’s selling and administrative expenses consist of $315,000 per year in fixed expenses and $3 per unit sold in...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $42.60 per unit) $ 1,661,400 Cost of goods sold (39,000 units × $21 per unit) 819,000 Gross margin 842,400 Selling and administrative expenses 409,500 Net operating income $ 432,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $44.60 per unit) $ 1,739,400 Cost of goods sold (39,000 units × $22 per unit) 858,000 Gross margin 881,400 Selling and administrative expenses 409,500 Net operating income $ 471,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:    Whitman Company Income Statement   Sales (35,000 units × $25 per unit) $ 875,000   Cost of goods sold (35,000 units × $16 per unit) 560,000   Gross margin 315,000   Selling and administrative expenses 280,000   Net operating income $ 35,000    The company’s selling and administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit sold in...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units × $43.10 per unit) $ 1,724,000 Cost of goods sold (40,000 units × $24 per unit) 960,000 Gross margin 764,000 Selling and administrative expenses 500,000 Net operating income $ 264,000 The company’s selling and administrative expenses consist of $300,000 per year in fixed expenses and $5 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $43.10 per unit) $ 1,680,900 Cost of goods sold (39,000 units × $21 per unit) 819,000 Gross margin 861,900 Selling and administrative expenses 448,500 Net operating income $ 413,400 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT