During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 46,000 mini refrigerators, of which 40,000 were sold. Operating data for the month are summarized as follows: 1 Sales 2 Manufacturing costs: 5 Direct materials 4 Direct labor 5 Variable manufacturing cost $8,800,000.00 $3,450,000.00 1,196,000.00 782,000.00 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: 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).

During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 46,000 mini refrigerators, of which 40,000 were sold. Operating data for the month are summarized as follows: 1 Sales 2 Manufacturing costs: 5 Direct materials 4 Direct labor 5 Variable manufacturing cost $8,800,000.00 $3,450,000.00 1,196,000.00 782,000.00 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: 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).

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 3E: Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began...

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