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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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Solution Summary

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

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