2-b. Prepare an operating income statement for the year using variable costing.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Great Outdoze Company manufactures sleeping bags, which sell for $66.30 each. The variable costs of production are as follows:
 

       
Direct material $ 19.20  
Direct labor   10.50  
Variable manufacturing overhead   8.10  
 


Budgeted fixed overhead in 20x1 was $140,700 and budgeted production was 21,000 sleeping bags. The year’s actual production was 21,000 units, of which 17,700 were sold. Variable selling and administrative costs were $1.40 per unit sold; fixed selling and administrative costs were $29,000.
 
Required:
1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.
2-a. Prepare an operating income statement for the year using absorption costing.
2-b. Prepare an operating income statement for the year using variable costing.
3. Reconcile reported operating income under the two methods using the shortcut method.

Prepare an operating income statement for the year using variable costing. (Do not round intermediate calculations.)
GREAT OUTDOZE, INC.
Operating Income Statement For the Year Ended December 31, 20x1
Variable Costing
Variable expenses:
$
Fixed expenses:
Transcribed Image Text:Prepare an operating income statement for the year using variable costing. (Do not round intermediate calculations.) GREAT OUTDOZE, INC. Operating Income Statement For the Year Ended December 31, 20x1 Variable Costing Variable expenses: $ Fixed expenses:
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