Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (17,000 units)   $2,040,000   Production costs (22,000 units):     Direct materials $976,800     Direct labor 468,600     Variable factory overhead 235,400     Fixed factory overhead 156,200   1,837,000   Selling and administrative expenses:     Variable selling and administrative expenses $284,700     Fixed selling and administrative expenses 110,200   394,900   If required, round interim per-unit calculations to the nearest cent. a.  Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales  $2,040000.00 Cost of goods sold  fill in the blank  Gross profit  $620,500.00 Selling and administrative expenses  394,900.00 Income from operations  $225,600.00   Feedback   a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Learning Objective 1. b.  Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales    $2,040,000.00 Variable cost of goods sold    fill in the blank  Manufacturing margin    $ fill in the blank  Variable selling and administrative expenses    284,700.00 Contribution margin    $456,500.00 Fixed costs:     Fixed factory overhead  $156,200.00   Fixed selling and administrative expenses  110,200.00   Total fixed costs    fill in the blank  Income from operations    $190,100.00

Question

Income Statements under Absorption and Variable Costing

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

Sales (17,000 units)   $2,040,000  
Production costs (22,000 units):    
Direct materials $976,800    
Direct labor 468,600    
Variable factory overhead 235,400    
Fixed factory overhead 156,200   1,837,000  
Selling and administrative expenses:    
Variable selling and administrative expenses $284,700    
Fixed selling and administrative expenses 110,200   394,900  

If required, round interim per-unit calculations to the nearest cent.

a.  Prepare an income statement according to the absorption costing concept.

Shawnee Motors Inc.
Absorption Costing Income Statement
For the Month Ended August 31
Sales  $2,040000.00
Cost of goods sold  fill in the blank 
Gross profit  $620,500.00
Selling and administrative expenses  394,900.00
Income from operations  $225,600.00
 
Feedback
 

a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead.

Learning Objective 1.

b.  Prepare an income statement according to the variable costing concept.

Shawnee Motors Inc.
Variable Costing Income Statement
For the Month Ended August 31
Sales    $2,040,000.00
Variable cost of goods sold    fill in the blank 
Manufacturing margin    $ fill in the blank 
Variable selling and administrative expenses    284,700.00
Contribution margin    $456,500.00
Fixed costs:    
Fixed factory overhead  $156,200.00  
Fixed selling and administrative expenses  110,200.00  
Total fixed costs    fill in the blank 
Income from operations    $190,100.00

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