Absorption and Variable Costing Income Statements for Two Months and AnalysisDuring the first month of operations ended July 31, Head Gear Inc. manufactured 33,900 hats, of which 32,200 vwere sold. Operating data for the month are summarized as follows:Sales$296,240Manufacturing costs:Direct materials$176,280Direct labor47,460Variable manufacturing cost20,340Fixed manufacturing cost20,340264/420Selling and administrative expenses:Variable$16,100Fixed11,75027,850During August Head Gear Inc, manufectured 30,500 hats and sold 32,200 hats. Operating data for August are summarized as folovsiSales$296,240Manufacturing costs:Direct materials$158,600Direct labor42.700Variable manufacturing cost18,30020,340239,940Fixed manufacturing costSelling and administrative expenses:$16.100Variable11.75027 850FixedRequired: 2a. Prepare income statement for July using the variable costing concept.Head Gear Inc.Variable Costing Income StatementFor the Month Ended July 31Sales$ 296,240Variable cost of goods sold:Variable cost of goods manufacturedS244,080 VInventory, July 3111,900Total variable cost of goods soldManufacturing marginVariable selling and administrative expensesContribution marginFixed costs:Fixed maniifacturing costs,20.340Fixed selling and administrative expenses11.75032,090Total fixed costsOperating incomeFeedtack

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Description: Absorption and Variable Costing Income Statements for Two Months and AnalysisDuring the first month of operations ended July 31, Head Gear Inc. manufactured 33,900 hats, of which 32,200 vwere sold. Operating data for the month are summarized as foll

Variable costing means that inventory is valued at variable manufacturing cost and fixed cost is…

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2a. Prepare income statement for July using the variable costing concept. Head Gear Inc. Variable Costing Income Statement For the Month Ended July 31 Sales 296,240 V Variable cost of goods sold: Variable cost of goods manufactured 244,080 Inventory, July 31 11,900 X Total variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs 20,340 Fixed selling and administrative expenses 11,750 Total fixed costs 32,090 Operating income Fendack

2a. Prepare income statement for July using the variable costing concept. Head Gear Inc. Variable Costing Income Statement For the Month Ended July 31 Sales 296,240 V Variable cost of goods sold: Variable cost of goods manufactured 244,080 Inventory, July 31 11,900 X Total variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs 20,340 Fixed selling and administrative expenses 11,750 Total fixed costs 32,090 Operating income Fendack

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 1PB: Absorption and variable costing income statements During the first month of operations ended July...

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Absorption and variable costing income statements During the first month of operations ended July 31, YoSan Inc. manufactured 2,400 flat panel televisions, of which 2,000 were sold. Operating data for the month are summarized as follows: Instructions 1. Prepare an income statement based on the absorption costing concept. 2. Prepare an income statement based on the variable costing concept. 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).
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Total and Unit Product Cost Martinez Manufacturing Inc. showed the following costs for last month: Last month, 4,000 units were produced and sold. Required: 1. Classify each of the costs as product cost or period cost. 2. What is the total product cost for last month? 3. What is the unit product cost for last month?
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During the first month of operations ended May 31, Big Sky Creations Company produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for the month are summarized as follows: During June, Big Sky Creations produced 32,000 designer cowboy boots and sold 36,000 cowboy boots. Operating data for June are summarized as follows: Instructions 1. Using the absorption costing concept, prepare income statements for (a) May and (b) June. 2. Using the variable costing concept, prepare income statements for (a) May and (b) June. 3. a. Explain the reason for the differences in operating income in (1) and (2) for May. b. Explain the reason for the differences in operating income in (1) and (2) for June. 4. Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain.
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