Question Ansara Company had the following abbreviated income statement for the year ended December 31, 2016: Assume that there were $3, 860 million fixed manufacturing costs and $1, 170 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows: Assume that 30% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period. Prepare an income statement according to the variable costing concept for Ansara Company for 2016. Explain the difference between the amount of income from operations reported under the absorption costing and variable costing concepts.
Question Ansara Company had the following abbreviated income statement for the year ended December 31, 2016: Assume that there were $3, 860 million fixed manufacturing costs and $1, 170 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows: Assume that 30% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period. Prepare an income statement according to the variable costing concept for Ansara Company for 2016. Explain the difference between the amount of income from operations reported under the absorption costing and variable costing concepts.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...
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Ansara Company had the following abbreviated income statement for the year ended December 31, 2016: Assume that there were $3, 860 million fixed manufacturing costs and $1, 170 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows: Assume that 30% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period. Prepare an income statement according to the variable costing concept for Ansara Company for 2016. Explain the difference between the amount of income from operations reported under the absorption costing and variable costing concepts.
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