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    Variable and Absorption Costing

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    AFN COMPANY
    Income Statement
    For the Year Ended December 31
    (Variable Costing)

    AFN COMPANY
    Income Statement
    For the Year Ended December 31
    (Variable Costing)

    2005 2006

    Sales
    Variable expenses
    Variable cost of goods sold
    Inventory, January 1
    Variable manufacturing
      costs
    Cost of goods available
      for sale
    Inventory, December 31
    Variable cost of goods
      sold
    Variable selling expenses
    Total variable expenses
    Contribution margin
    Fixed expenses
    Manufacturing overhead
    Administrative
    Total fixed expenses
    Income from operations $6,000,000

             0

     xxx

     xxx
       300,000

       xxx,000
       xxx,000
     xxx
     4,500,000

     xxx
       xxx
    xxx
    $1,500,000

     (1)

     (2)

     (3) $8,000,000

       xxx

       xxx

    xxx
             0

     x,xxx,000
       xxx,000
    xxx
     6,000,000

     xxx
       xxx
     xxx
    $3,000,000

     (4)

     (5)

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    https://brainmass.com/economics/production/variable-and-absorption-costing-86447

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

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