Variable Costing Income Statement for a Service CompanyThe actual and planned data for Underwater University for the Fall term were as follows:ActualPlannedEnrollment4,5004,125Tuition per credit hour$120$135Credit hours43,20060,450Registration, records, and marketing costs per enrolled student$275$275Instructional costs per credit hour$60$64Depreciation on classrooms and equipment$825,600$825,600Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours.Depreciation is a fixed cost.Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term. Underwater UniversityVariable Costing Income StatementFor the Fall TermRevenueVariable costs:Registration, records, and marketing costsInstructional costsTotal variable costsContribution marginDepreciation on classrooms and equipmentOperating income

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Asked Nov 17, 2019
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Variable Costing Income Statement for a Service Company
The actual and planned data for Underwater University for the Fall term were as follows:
Actual
Planned
Enrollment
4,500
4,125
Tuition per credit hour
$120
$135
Credit hours
43,200
60,450
Registration, records, and marketing costs per enrolled student
$275
$275
Instructional costs per credit hour
$60
$64
Depreciation on classrooms and equipment
$825,600
$825,600
Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours.
Depreciation is a fixed cost.
Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term.
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Variable Costing Income Statement for a Service Company The actual and planned data for Underwater University for the Fall term were as follows: Actual Planned Enrollment 4,500 4,125 Tuition per credit hour $120 $135 Credit hours 43,200 60,450 Registration, records, and marketing costs per enrolled student $275 $275 Instructional costs per credit hour $60 $64 Depreciation on classrooms and equipment $825,600 $825,600 Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost. Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term.

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Underwater University
Variable Costing Income Statement
For the Fall Term
Revenue
Variable costs:
Registration, records, and marketing costs
Instructional costs
Total variable costs
Contribution margin
Depreciation on classrooms and equipment
Operating income
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Underwater University Variable Costing Income Statement For the Fall Term Revenue Variable costs: Registration, records, and marketing costs Instructional costs Total variable costs Contribution margin Depreciation on classrooms and equipment Operating income

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Expert Answer

Step 1

Variable Costing:

Variable costing is the method that is used by the management for decision making purpose. The cost of goods manufactured includes direct material, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Step 2

Compute the variable costing income statement.

Underwater university
Variable costing income statement
Particulars
$
Revenue (1)
7,254,000
Less: Variable costs
Registration, records, and marketing costs (2)
1,237,500
Instructional costs (3)
3,868,800
Total variable costs
5,106,300
Contribution margin
2,147,700
Depreciation on classrooms and equipment
825,600
Income from operations
1,322,100
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Underwater university Variable costing income statement Particulars $ Revenue (1) 7,254,000 Less: Variable costs Registration, records, and marketing costs (2) 1,237,500 Instructional costs (3) 3,868,800 Total variable costs 5,106,300 Contribution margin 2,147,700 Depreciation on classrooms and equipment 825,600 Income from operations 1,322,100

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Step 3

Working Note (1):

Calculate the value of sa...

Sales ($120 x 60, 450 credit hours)
$7, 254, 000
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Sales ($120 x 60, 450 credit hours) $7, 254, 000

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