During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 165,000 mini refrigerators, of which 150,000 were sold. Operating data for the month are summarized as follows:41 Sales2 Manufacturing costs.Direct materialsDirect laborVariable manufacturing cost6 Fixed manufacturing cost7 Selling and administrative expenses8 Variable3579FixedTH$1,980,000.004,290,000.00412,500.002,475,000.00$450,000.001,125,000.00$11,250,000.009,157,500.001,575,000.00Required: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)E

Under Absorption Costing, the Fixed manufacturing cost is considered as product cost and absorbed…

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)

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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Question

During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 165,000 mini refrigerators, of which 150,000 were sold. Operating data for the month are summarized as follows:
4
1 Sales
2 Manufacturing costs.
Direct materials
Direct labor
Variable manufacturing cost
6 Fixed manufacturing cost
7 Selling and administrative expenses
8 Variable
3
57
9
Fixed
TH
$1,980,000.00
4,290,000.00
412,500.00
2,475,000.00
$450,000.00
1,125,000.00
$11,250,000.00
9,157,500.00
1,575,000.00
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)
E

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