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Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.

Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (41,000 units x $43.10 per unit) Cost of goods sold (41,000 units x $22 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,767,100 902,000 865,100 471,500 $ 393,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($230,000+ 46,000 units) Absorption costing unit product cost $ 10 $ 22 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.
Transcribed Image Text:Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (41,000 units x $43.10 per unit) Cost of goods sold (41,000 units x $22 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,767,100 902,000 865,100 471,500 $ 393,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($230,000+ 46,000 units) Absorption costing unit product cost $ 10 $ 22 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.
Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement Complete this question by entering your answers in the tabs below. Required 1 Required 2 Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income Absorption costing net operating income < Required 1 Required 2 >
Transcribed Image Text:Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement Complete this question by entering your answers in the tabs below. Required 1 Required 2 Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income Absorption costing net operating income < Required 1 Required 2 >
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