Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Textbook Question
Chapter 19, Problem 1R

The records of Anderjak Corporation contain the following information for the month of January:

Chapter 19, Problem 1R, The records of Anderjak Corporation contain the following information for the month of January:

The

The company has no beginning inventory.

REQUIREMENT

You have been asked to prepare a variable costing (direct costing) income statement and an absorption costing income statement for the month of January. Review the worksheet VARCOST that follows these requirements.

Expert Solution & Answer
Check Mark
To determine

Prepare a income statement for january by using variable costing and absorption costing method.

Explanation of Solution

Prepare a income statement using absorption costing:

Income statement
Absorption costing
ParticularsAmount ($)Amount ($)
Sales 80,000×$30 $ 2,400,000
Cost of goods sold:  
     Beginning inventory cost$ 266,875  
     Variable manufacturing costs 70,000×$14980,000 
     Fixed manufacturing costs315,000 
     Total goods available for sale$ 1,561,875  
     Less: ending inventory =$1,561,87515,000+70,000×15,000+70,00080,000=18.375×5,00091,875 
          Cost of goods sold 1,470,000
Gross profit $ 930,000
Selling expenses:  
     Fixed selling expenses$ 100,000  
     Variable selling expenses80,000×$2160,000 
          Total selling expenses 260,000
Operating income $ 670,000

Table (1)

Prepare a income statement using variable costing:

Income statement
Variable costing
ParticularsAmount ($)Amount ($)
Sales $ 2,400,000
Cost of goods sold:  
     Beginning inventory cost$ 210,000  
     Variable manufacturing costs 70,000×$14980,000 
     Total goods available for sale$ 1,190,000  
     Less: ending inventory=$1,190,00015,000+70,000×15,000+70,00080,000=14×5,00070,000 
          Variable cost of goods sold 1,120,000
Manufacturing margin $ 1,280,000
Variable selling expenses 80,000×$2 160,000
Contribution margin $ 1,120,000
Fixed costs:  
     Fixed manufacturing costs$ 315,000  
     Fixed selling expenses100,000 
          Total fixed costs $ 415,000
Operating income $ 705,000

Table (2)

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