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Appendix Absorption costing income statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept: Sales (420,000 units) $7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x $14 per unit) $7,000,000 Less ending inventory (80,000 units x $14 per unit) 1,120,000 Variable cost of goods sold 5,880,000 Manufacturing margin $1,570,000 Variable selling and administrative expenses 80,000 Contribution margin $1,490,000 Fixed costs: Fixed manufacturing costs $ 160,000 Fixed selling and administrative expenses 75,000 235,000 Income from operations $1,255,000 a. Prepare an absorption costing income statement . b. Reconcile the variable costing income from operations of $1,255,000 with the absorption costing income from operations determined in (a).

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Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 21, Problem 21.28EX
Textbook Problem

Appendix

Absorption costing income statement

On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept:

Sales (420,000 units) $7,450,000
Variable cost of goods sold:
Variable cost of goods manufactured (500,000 units x $14 per unit) $7,000,000
Less ending inventory (80,000 units x $14 per unit) 1,120,000
Variable cost of goods sold 5,880,000
Manufacturing margin $1,570,000
Variable selling and administrative expenses 80,000
Contribution margin $1,490,000
Fixed costs:
Fixed manufacturing costs $ 160,000
Fixed selling and administrative expenses 75,000 235,000
Income from operations $1,255,000
  • a. Prepare an absorption costing income statement.
  • b. Reconcile the variable costing income from operations of $1,255,000 with the absorption costing income from operations determined in (a).

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Chapter 21 Solutions

Accounting
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