During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 46,000 mini refrigerators, of which 40,000 were sold. Operating data for the month are summarized as follows: 1 Sales $8,800,000.00 2 Manufacturing costs: 3 Direct materials $3,450,000.00 4 Direct labor 1,196,000.00 5 Variable manufacturing cost 782,000.00 6 Fixed manufacturing cost 598,000.00 6,026,000.00 7 Selling and administrative expenses: 8 Variable $600,000.00 9 Fixed 320,000.00 920,000.00 Required: Prepare an income statement based on the absorption costing concept.* Prepare an income statement based on the variable costing concept.* Explain the reason for the difference in the amount of operating income reported in (1) and (2).
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 46,000 mini refrigerators, of which 40,000 were sold. Operating data for the month are summarized as follows:
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1 |
Sales |
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$8,800,000.00 |
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2 |
|
|
|
|
3 |
Direct materials |
$3,450,000.00 |
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|
4 |
Direct labor |
1,196,000.00 |
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|
5 |
Variable manufacturing cost |
782,000.00 |
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|
6 |
Fixed manufacturing cost |
598,000.00 |
6,026,000.00 |
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7 |
Selling and administrative expenses: |
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|
|
8 |
Variable |
$600,000.00 |
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|
9 |
Fixed |
320,000.00 |
920,000.00 |
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Required: |
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Prepare an income statement based on the absorption costing concept.* |
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Prepare an income statement based on the variable costing concept.* |
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Explain the reason for the difference in the amount of operating income reported in (1) and (2). |
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