The P. Talbot Company was organized just one month ago. The company manufactures and sells a unique product that has been quickly accepted by consumers. The results of the company’s first month of operations are shown below (absorption costing basis): Sales (10,000 units @ $20) $200,000 Less Cost of Goods Sold 140,000 Gross Margin 60,000 Less Selling and Administrative expenses 45,000 Net Income $15,000 Variable selling and administrative expenses are $2 per unit. The company produced 12,000 units during the month. Variable manufacturing costs total $10 per unit, and fixed manufacturing overhead costs total $48,000 per month. What is the ending inventory value using full-absorption costing?_________ Using a Variable costing basis Income statement: What would be the Contribution margin?_____________________ What would be the net income/loss? ________________________ Reconcile the variable costing and absorption costing net income figures.
The P. Talbot Company was organized just one month ago. The company manufactures and sells a unique product that has been quickly accepted by consumers. The results of the company’s first month of operations are shown below (absorption costing basis):
Sales (10,000 units @ $20) $200,000
Less Cost of Goods Sold 140,000
Gross Margin 60,000
Less Selling and Administrative expenses 45,000
Net Income $15,000
Variable selling and administrative expenses are $2 per unit. The company produced 12,000 units during the month. Variable
- What is the ending inventory value using full-absorption costing?_________
- Using a Variable costing basis Income statement:
What would be the Contribution margin?_____________________
What would be the net income/loss? ________________________
- Reconcile the variable costing and absorption costing net income figures.
Step by step
Solved in 2 steps with 3 images