During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows: 1Sales $10,800,000.002Manufacturing costs: 3Direct materials$6,400,000.00 4Direct labor1,600,000.00 5Variable manufacturing cost1,280,000.00 6Fixed manufacturing cost320,000.009,600,000.007Selling and administrative expenses: 8Variable$1,080,000.00 9Fixed180,000.001,260,000.00 Required:1.Prepare an income statement based on the absorption costing concept.*2.Prepare an income statement based on the variable costing concept.*3.Explain the reason for the difference in the amount of operating income reported in (1) and (2). *Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative.

Particulars Amount $ Sales (A) 10,800,000 Less: Cost of Goods Sold (B)…

Answered: During the first month of operations…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...

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During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows:

1	Sales		$10,800,000.00
2	Manufacturing costs:
3	Direct materials	$6,400,000.00
4	Direct labor	1,600,000.00
5	Variable manufacturing cost	1,280,000.00
6	Fixed manufacturing cost	320,000.00	9,600,000.00
7	Selling and administrative expenses:
8	Variable	$1,080,000.00
9	Fixed	180,000.00	1,260,000.00

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).

*Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative.

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