On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept:

Weatherford Company Absorption Costing Income Statement For the Month Ended November 30

Sales (3,300 units) $125,400
Cost of goods sold:
Cost of goods manufactured (3,900 units) $105,300
Inventory, November 30 (500 units) (13,500)
Total cost of goods sold 102,500
Gross profit $44,500
Selling and administrative expenses 25,730
Income from operations $18,770

Assume the fixed manufacturing costs were $28,800 and the fixed selling and administrative expenses were $12,600.

Required:
Prepare an income statement according to the variable costing concept.

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ayokenny2001 ayokenny2001 · Answer 1 · 2021-02-14T01:07:53+01:00

Answer:

See below

Explanation:

Income statement according to variable costing .

Sales

$125,400

Less:

Variable cost of goods sold

Beginning inventory

$0

Variable cost of goods manufactured

($50,000)

Ending inventory

($13,500)

Variable cost of goods sold

($63,500)

Manufacturing margin

$64,000

Less:

Variable selling and administrative expenses

($25,730)

Contribution margin

$35,270

Less:

Fixed costs

Fixed manufacturing cost

($28,800)

Selling and administrative expenses

($12,600)

Income from operations

$3,000