Absorption costing income statement
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SoySun manufactures and sells premium soy milk by the gallon. SoySun just finished its first year of operations. The following data relates to this first year:
Number of gallons produced 75,000
Number of gallons sold 70,000
Sales price $3.00 per gallon
Unit product cost under variable costing $1.45 per gallon
Total contribution margin $84,000
Total fixed manufacturing overhead cost $63,000
Total fixed selling and administrative expense $10,500
Required:
Using the absorption costing method, prepare SoySun's Income Statement for the year.
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Solution Summary
The solution explains how to prepare an income statement under the absorption costing method
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Under absorption costing, the fixed manufacturing overhead is also included in the inventory. The total fixed manufacturing overhead is 63,000. Number of gallons produced is 75,000
Fixed manufacturing cost / gallon = 63,000/75,000=$0.84
The manufacturing cost under absorption ...
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