Question

FAM13-A4 (similar to) Question Help Examine the Osborne Company's simplified income statement based on variable costing Assume that the budgeted volume for absorption costing in 20X0 and 20 was 1,420 units and that total fixed costs were identical in 20X0 and 20X1. There is no beginning or ending work in process (Click the icon to view the simplified income statement.) Requirements 1. Prepare an income statement based on absorption costing Assume that actual fixed costs were equal to budgeted fixed costs 2. Explain the difference in operating income between absorption costing and variable costing. Be specific For the Year Ended December 31, 20X1 Sales Operating income

Answer 1

solution 1 Income statement (under absorption costing) sales (1290 unit at $12) 1$ 15,480 less: Cost of goods sold - opening inventory (100 unit x $906) $96.0 (+) Cost of goods manufactured, (1220 unit X $906 ) $11,712 Cost of goods available $12, 6.72 for sale Es to closing inventory (30 unit X $9.6) 8) 12,384 Gross Profit $3096 Less: Marketing, selling and admin expenses variable cost $ 500 Fixed Cost $ 150 Met obesating In Come $2,446

working Notes? - o t Manufacturing expenses ro wal? No? per unit tot variable expenses + Fixed expenge = $ 6+ / $ 5112 n ew Jooo, oon 14.20 unit NE 2 $6+ $3.6 = $9.6 Per ynitt Jedino variable selling & admin expense. Perunit = ($500 l 1290 untuicios 2)