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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.

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

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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Solution Summary

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