Sales (4,000 units).. $2,600,000 Production costs (4,350 units): Direct materials.. Direct labor... Variable factory overhead. Fixed factory overhead.. Selling and administrative expenses: Variable selling and administrative expenses.. Fixed selling and administrative expenses.. $1,218,000 522,000 87,000 130,500 1,957,500 ... $ 60,000 25,000 .... 85,000 ......

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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100%

Gallatin County Motors Inc. assembles and sells snowmobile engines.
The company began operations on July 1 and operated at 100% of
capacity during the first month. The attached data summarize the
results for July:

a. Prepare an income statement according to the absorption
costing concept.
b. Prepare an income statement according to the variable costing
concept.
c. What is the reason for the difference in the amount of operating
income reported in (a) and (b)?

Sales (4,000 units)..
$2,600,000
Production costs (4,350 units):
Direct materials..
Direct labor...
Variable factory overhead.
Fixed factory overhead..
Selling and administrative expenses:
Variable selling and administrative expenses..
Fixed selling and administrative expenses..
$1,218,000
522,000
87,000
130,500
1,957,500
...
$ 60,000
25,000
....
85,000
......
Transcribed Image Text:Sales (4,000 units).. $2,600,000 Production costs (4,350 units): Direct materials.. Direct labor... Variable factory overhead. Fixed factory overhead.. Selling and administrative expenses: Variable selling and administrative expenses.. Fixed selling and administrative expenses.. $1,218,000 522,000 87,000 130,500 1,957,500 ... $ 60,000 25,000 .... 85,000 ......
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