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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income Whitman Company Income Statement Direct materials Direct labor The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Variable manufacturing overhead Fixed manufacturing overhead ($306,000 + 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 6 $ 23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below. Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement

Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income Whitman Company Income Statement Direct materials Direct labor The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Variable manufacturing overhead Fixed manufacturing overhead ($306,000 + 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 6 $ 23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below. Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement

Managerial Accounting: The Cornerstone of Business Decision-Making
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
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($306,000+ 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 6 $23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below. Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement
Transcribed Image Text:Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($306,000+ 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 6 $23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below. Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement
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