Question
Asked Nov 2, 2019
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During 2019, Basler Manufacturing produced 60,000 units and sold 55,000 for $10 per unit. Variable manufacturing costs were $4 per unit.
Annual fixed manufacturing overhead was $120,000 ($2 per unit). Variable selling and administrative costs were $1 per unit sold, and fixed
selling and administrative costs were $30,000.
Prepare a variable costing income statement.
BASLER MANUFACTURING
Income Statement (Variable Costing)
$
$
2:00 PM
11/2/2019
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During 2019, Basler Manufacturing produced 60,000 units and sold 55,000 for $10 per unit. Variable manufacturing costs were $4 per unit. Annual fixed manufacturing overhead was $120,000 ($2 per unit). Variable selling and administrative costs were $1 per unit sold, and fixed selling and administrative costs were $30,000. Prepare a variable costing income statement. BASLER MANUFACTURING Income Statement (Variable Costing) $ $ 2:00 PM 11/2/2019

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Expert Answer

Step 1

Variable costing income statement.

Variable costing income statement refers to an income statement that is prepared by a company for decision-making process and for other internal purposes. In this statement, the cost of goods manufactured includes only the variable costs such as direct materials, direct labor and variable manufacturing overhead or factory overhead. However the fixed factory overhead is considered as period expense.

Step 2

Prepare the variable costing incom...

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BASLER MANUFACTURING Income statement (Variable Costing) (S) Amount (S) Amount Particulars Sales (55,000 uni ts x$10 per unit) Less: Variable cost of goods sold (55,000 units*$4)| Variable selling and admini strative expense (55,000 units $1) Contribution margin Fixed manufacturing overhead Fixed selling and admini strative expense 550,000 220,000 55,000| 275,000 275,000 120,000 30.000 150.000 125,000 Net income

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