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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