Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc.Absorption Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Cost of goods sold: Cost of goods manufactured $840,000 Ending inventory (168,000) Total cost of goods sold (672,000) Gross profit $528,000 Selling and administrative expenses (289,000) Operating income $239,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin. Saxon, Inc.Variable Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Variable cost of goods sold: Variable cost of goods manufactured $600,000 Ending inventory (120,000) Total variable cost of goods sold (480,000) Manufacturing margin $720,000 Variable selling and administrative expenses (224,000) Contribution margin $496,000 Fixed costs: Fixed manufacturing costs $240,000 Fixed selling and administrative expenses 65,000 Total fixed costs (305,000) Operating income $191,000 Method Comparison Review the income statements on the Absorption Statement and Variable Statement, then complete the following table. The company’s sales price per unit is $75, and the number of units in ending inventory is 4,000. There was no beginning inventory. Item Amount Number of units sold fill in the blank 868411014f8c001_1 Variable sales and administrative cost per unit $fill in the blank 868411014f8c001_2 Number of units manufactured fill in the blank 868411014f8c001_3 Variable cost of goods manufactured per unit $fill in the blank 868411014f8c001_4 Fixed manufacturing cost per unit
Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc.Absorption Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Cost of goods sold: Cost of goods manufactured $840,000 Ending inventory (168,000) Total cost of goods sold (672,000) Gross profit $528,000 Selling and administrative expenses (289,000) Operating income $239,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin. Saxon, Inc.Variable Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Variable cost of goods sold: Variable cost of goods manufactured $600,000 Ending inventory (120,000) Total variable cost of goods sold (480,000) Manufacturing margin $720,000 Variable selling and administrative expenses (224,000) Contribution margin $496,000 Fixed costs: Fixed manufacturing costs $240,000 Fixed selling and administrative expenses 65,000 Total fixed costs (305,000) Operating income $191,000 Method Comparison Review the income statements on the Absorption Statement and Variable Statement, then complete the following table. The company’s sales price per unit is $75, and the number of units in ending inventory is 4,000. There was no beginning inventory. Item Amount Number of units sold fill in the blank 868411014f8c001_1 Variable sales and administrative cost per unit $fill in the blank 868411014f8c001_2 Number of units manufactured fill in the blank 868411014f8c001_3 Variable cost of goods manufactured per unit $fill in the blank 868411014f8c001_4 Fixed manufacturing cost per unit
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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Absorption Statement
Absorption costing does not distinguish between variable and fixed costs. All
Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 |
||
Sales | $1,200,000 | |
Cost of goods sold: | ||
Cost of goods manufactured | $840,000 | |
Ending inventory | (168,000) | |
Total cost of goods sold | (672,000) | |
Gross profit | $528,000 | |
Selling and administrative expenses | (289,000) | |
Operating income | $239,000 |
Variable Statement
Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin.
Saxon, Inc. Variable Costing Income Statement For the Year Ended December 31 |
|||
Sales | $1,200,000 | ||
Variable cost of goods sold: | |||
Variable cost of goods manufactured | $600,000 | ||
Ending inventory | (120,000) | ||
Total variable cost of goods sold | (480,000) | ||
Manufacturing margin | $720,000 | ||
Variable selling and administrative expenses | (224,000) | ||
Contribution margin | $496,000 | ||
Fixed costs: | |||
Fixed manufacturing costs | $240,000 | ||
Fixed selling and administrative expenses | 65,000 | ||
Total fixed costs | (305,000) | ||
Operating income | $191,000 |
Method Comparison
Review the income statements on the Absorption Statement and Variable Statement, then complete the following table. The company’s sales price per unit is $75, and the number of units in ending inventory is 4,000. There was no beginning inventory.
Item | Amount |
Number of units sold | fill in the blank 868411014f8c001_1 |
Variable sales and administrative cost per unit | $fill in the blank 868411014f8c001_2 |
Number of units manufactured | fill in the blank 868411014f8c001_3 |
Variable cost of goods manufactured per unit | $fill in the blank 868411014f8c001_4 |
Fixed manufacturing cost per unit |
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