Managerial Accounting (Absorption Costing & Variable Costing)
Not what you're looking for?
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below:
Please see the attachment for better layout.
Whitman Company
Income Statement
Sales (39,000 units Ã? $44.6 per unit) $1,739,400
Cost of goods sold (39,000 units Ã? $21 per unit)
819,000
Gross margin 920,400
Selling and administrative expenses
448,500
Net operating income
$471,900
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 $21 per unit product cost given above is computed as follows:
Direct materials $9
Direct labor 3
Variable manufacturing overhead 3
Fixed manufacturing overhead ($306,000 ÷ 51,000 units)
6
Absorption costing unit product cost
$21
Requirement 1:
Redo the company's income statement in the contribution format using variable costing. (Input all amounts as positive values.
Requirement 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.
Purchase this Solution
Solution Summary
The solution discusses managerial accounting including absorption costing, and variable costing.
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Learning Lean
This quiz will help you understand the basic concepts of Lean.