Absorption Costing Income StatementOn October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on thevariable costing concept:Maryville Equipment CompanyVariable Costing Income StatementFor the Month Ended October 31Sales (220,000 units)$7,920,000Variable cost of goods sold:Variable cost of goods manufactured$6,360,000Inventory, October 31 (45,000 units)(1,080,000)Total variable cost of goods sold(5,280,000)Manufacturing margin$2,640,000Variable selling and administrative expenses(330,000)Contribution margin$2,310,000Fixed costs:Fixed manufacturing costs$530,000Fixed selling and administrative expenses100,000Total fixed costs(630,000)$1,680,000Operating income Prepare an income statement under absorption costingMaryville Equipment CompanyAbsorption Costing Income StatementFor the Month Ended October 31Cost of goods sold:

Question
Asked Nov 17, 2019
33 views
Absorption Costing Income Statement
On October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on the
variable costing concept:
Maryville Equipment Company
Variable Costing Income Statement
For the Month Ended October 31
Sales (220,000 units)
$7,920,000
Variable cost of goods sold:
Variable cost of goods manufactured
$6,360,000
Inventory, October 31 (45,000 units)
(1,080,000)
Total variable cost of goods sold
(5,280,000)
Manufacturing margin
$2,640,000
Variable selling and administrative expenses
(330,000)
Contribution margin
$2,310,000
Fixed costs:
Fixed manufacturing costs
$530,000
Fixed selling and administrative expenses
100,000
Total fixed costs
(630,000)
$1,680,000
Operating income
help_outline

Image Transcriptionclose

Absorption Costing Income Statement On October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on the variable costing concept: Maryville Equipment Company Variable Costing Income Statement For the Month Ended October 31 Sales (220,000 units) $7,920,000 Variable cost of goods sold: Variable cost of goods manufactured $6,360,000 Inventory, October 31 (45,000 units) (1,080,000) Total variable cost of goods sold (5,280,000) Manufacturing margin $2,640,000 Variable selling and administrative expenses (330,000) Contribution margin $2,310,000 Fixed costs: Fixed manufacturing costs $530,000 Fixed selling and administrative expenses 100,000 Total fixed costs (630,000) $1,680,000 Operating income

fullscreen
Prepare an income statement under absorption costing
Maryville Equipment Company
Absorption Costing Income Statement
For the Month Ended October 31
Cost of goods sold:
help_outline

Image Transcriptionclose

Prepare an income statement under absorption costing Maryville Equipment Company Absorption Costing Income Statement For the Month Ended October 31 Cost of goods sold:

fullscreen
check_circle

Expert Answer

Step 1

Absorption Costing: “Absorption costing is a method that allocates “direct labor, direct materials, fixed manufacturing overhead and variable manufacturing overhead” to products and it is required by GAAP for the purpose of external reporting”.

Step 2

Working notes :

&...

help_outline

Image Transcriptionclose

Calculate the cost of goods manufactured 'Variable cost of goods manufactured+ Cost of goods manufactured = Fixed manufacturing cost $6,360,000+$530,000 -$6,890,000 Calculate the manufacturing cost per unit Cost of goods manufactured under absorption costing Manufacturing per unit Number of units manufactured $6,890,000 $265,000units =$26 per unit Calculate the ending inventory for the month of October Ending inventory for the month Endinfinventory x Manufacturing cost per unit of October 45,000 unitsx $26 per unit -$1,170,000

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Marigold Corp. has had 4 years of net income. Due to this success, the market price of its 310,000 s...

A: Stock dividends: Stock dividends are the number of shares issued by a company to the existing shareh...

question_answer

Q: Using T accounts for Cash, Accounts Payable, Purchases, Purchases Returns and Allowances, Purchases ...

A: Calculate purchase discoounts:Purchase discount =( Purchase - Purchase returns and allowance)* Disco...

question_answer

Q: Biscayne's Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information fol...

A: As there are many requirements in this question, we are answering the last three requirementsalone.

question_answer

Q: The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $200,000; Offi...

A: Requirement 1:Calculation of the amount of premium paid by the employee& employer

question_answer

Q: Carla Vista Company buys merchandise on account from Tamarisk Company. The selling price of the good...

A: Journalize the transaction in the books of Carla Vista.

question_answer

Q: A company had a $21,000 net loss from operations for 2016. Depreciation expenses for 2016 were $8,60...

A: Cash flow from operating activity is a part of the statement of cash flow. Operating activities desc...

question_answer

Q: Multiple-Step Income Statement and Report Form of Balance Sheet The following selected accounts and ...

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and s...

question_answer

Q: For each of the following, identify the financial statement where the item is found. EquipmentDivide...

A: These are the basic elements of financial reporting. These are the set of books that a company maint...

question_answer

Q: Understanding Relationships, Master Budget, Comprehensive Review Optima Company is a high-technology...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3 schedules. Please resubm...