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    Contribution and Absorption Costing Income statement

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    Based upon the following/attached information please review the attached income statements.

    Required:
    Prepare an income statement for the month using the contribution format
    and the variable costing method

    Variable Costing Contribution Format Income Statement Per
    Total Unit
    Sales ($120 per part x 8400 units) $1,008,000.00 $120.00
    Variable expenses:
    Variable costs of goods sold (8400units *$31 per part) $260,400.00 31
    Variable selling and administrative expenses(8400*9) $75,600.00
    Total variable expenses $336,000.00 31

    Contribution margin (total sales-variable expenses) $672,000.00

    Fixed expenses:
    Fixed manufacturing overhead 151300
    Fixed selling and administrative expenses 109200
    Total fixed expenses $932,500.00

    Net operating income (loss) -$260,500.00
    CM-Fixed expenses (672000-932500)

    Prepare an income statement for the month using the absorption costing
    method

    Absorption Costing Income Statement

    Sales ($120 per part x 8400 units) $1,008,000.00
    Less cost of goods sold:
    Beginning inventory 0
    Add Cost of goods manufactured

    Goods available for sales
    Less ending inventory
    Gross Margin

    Less Selling & admin expenses
    Variable selling and admin expenses
    Fixed selling and admin expenses

    Net operating income

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    https://brainmass.com/business/income-statement/contribution-and-absorption-costing-income-statement-363451

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    Solution Summary

    The solution explains how to prepare income statement under variable and absorption costing

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