Please give me instruction on the following step by step: Variable Costing Income Statement The following data were adapted from a recent income statement of Bluth Company: (in millions) Sales $313,680 Operating costs: Cost of products sold $150,570 Marketing, administrative, and other expenses 100,380 Total operating costs $250,950 Income from operations $62,730 Assume that the variable amount of each category of operating costs is as follows: (in millions) Cost of products sold $84,690 Marketing, administrative, and other expenses 40,780 a. Based on the data given, prepare a variable costing income statement for Bluth Company, assuming that the company maintained constant inventory levels during the period. Bluth Company Variable Costing Income Statement (in millions) $ $ $ Fixed costs: $ Income from operations $ b. If Bluth Company reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing? If Bluth Company reduced its inventories during the period, then the cost of products sold would fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the absorption costing income statement would be, and the income from operations would be______. Liz C

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 7E: The following data were adapted from a recent income statement of The Procter Gamble Company (PG):...

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Please give me instruction on the following step by step:

Variable Costing Income Statement

The following data were adapted from a recent income statement of Bluth Company:

	(in millions)
Sales	$313,680
Operating costs:
Cost of products sold	$150,570
Marketing, administrative, and other expenses	100,380
Total operating costs	$250,950
Income from operations	$62,730

Assume that the variable amount of each category of operating costs is as follows:

	(in millions)
Cost of products sold	$84,690
Marketing, administrative, and other expenses	40,780

a. Based on the data given, prepare a variable costing income statement for Bluth Company, assuming that the company maintained constant inventory levels during the period.

Bluth Company
Variable Costing Income Statement
(in millions)
		$

		$

		$
Fixed costs:
	$

Income from operations		$

b. If Bluth Company reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing?

If Bluth Company reduced its inventories during the period, then the cost of products sold would ______________ fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the absorption costing income statement would be, ______________and the income from operations would be__________________.

Liz C

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