On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: Tudor Manufacturing Co. Income Statement - Variable Costing For the Month Ended June 30 1 Sales (420,000 units) $8,290,000.00 2 Variable cost of goods sold: 3 Variable cost of goods manufactured (490,000 units × $16 per unit) $7,840,000.00 4 Less ending inventory (70,000 units × $16 per unit) 1,120,000.00 5 Variable cost of goods sold 6,720,000.00 6 Manufacturing margin $1,570,000.00 7 Variable selling and administrative expenses 82,000.00 8 Contribution margin $1,488,000.00 9 Fixed costs: 10 Fixed manufacturing costs $137,200.00 11 Fixed selling and administrative expenses 74,000.00 211,200.00 12 Income from operations $1,276,800.00 Required: a. Prepare an absorption costing income statement. 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. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. “Less” or “Plus” and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar. b. Reconcile the variable costing income from operations of $1,276,800 with the absorption costing income from operations determined in (a). Be sure to complete the statement heading. Enter all amounts as positive numbers.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 14MCQ

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On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept:

Tudor Manufacturing Co.

Income Statement - Variable Costing

For the Month Ended June 30

1	Sales (420,000 units)		$8,290,000.00
2	Variable cost of goods sold:
3	Variable cost of goods manufactured (490,000 units × $16 per unit)	$7,840,000.00
4	Less ending inventory (70,000 units × $16 per unit)	1,120,000.00
5	Variable cost of goods sold		6,720,000.00
6	Manufacturing margin		$1,570,000.00
7	Variable selling and administrative expenses		82,000.00
8	Contribution margin		$1,488,000.00
9	Fixed costs:
10	Fixed manufacturing costs	$137,200.00
11	Fixed selling and administrative expenses	74,000.00	211,200.00
12	Income from operations		$1,276,800.00

	Required:
a.	Prepare an absorption costing income statement. 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. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. “Less” or “Plus” and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.
b.	Reconcile the variable costing income from operations of $1,276,800 with the absorption costing income from operations determined in (a). Be sure to complete the statement heading. Enter all amounts as positive numbers.

Labels
Cost of goods sold
For the Month Ended June 30
For the Year Ended June 30
Amount Descriptions
Contribution margin
Cost of goods manufactured
Ending inventory
Gross profit
Income from operations
Manufacturing margin
Sales
Selling and administrative expenses
Variable cost of goods sold

a. Prepare an absorption costing income statement. 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. Enter amoun:
positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. "Less" or "Plus" and colons will automatically appear if it is required. In
computations, round unit costs to two decimal places and round final answers to the nearest dollar.
Tudor Manufacturing Co.
Income Statement - Absorption Costing
For the Month Ended June 30
1 Sales
2 Cost of goods sold:
3
6.
7
8
4-

b. Reconcile the variable costing income from operations of $1,276,800 with the absorption costing income from operations previously determined. Enter all amounts as positive numbers. Be sure to complete the statement heading.
Tudor Manufacturing Co.
Income from Operations Absorption vs. Variable Costing
For the Month Ended June 30
1 Variable costing income from operations
2 Absorption costing income from operations
3 Difference

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