Question

The following information pertains to the first year of operation for Crystal Cold Coolers Inc. Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($225,000 3,000 units) Total variable selling expenses (515 per unit sold) Total fixed general and administrative expenses 3.000 2,500 $ 350 $ 80 $ 60 $ 10 $ 75 $ 37,500 $ 65,000 Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year, Complete this question by entering your answers in the tabs below. Full Absorption Costing Variable Costing Prepare Crystal Cold's full absorption costing income statement for the year. CRYSTAL COLD COOLERS INC Full Absorption Costing Income Statement Less: Cost of Goods Sold Gross Margin Less: Non-Manufacturing Expenses Net Operating Income

Answer 1

Income Statement-Full Absorption Costing
Sales [2500*350]		$           875,000
Less: Cost of goods sold		$           562,500
Gross Margin		$           312,500
Less: Non-Manufacturing expenses:
Variable selling expenses [2500*15]	$           37,500
Fixed general and administrative expenses	$           65,000
Total non manufacturing expenses		$           102,500
Net operating income		$           210,000
WORKING OF COST OF GOODS SOLD:
Direct material cost (3000*80)	$    240,000
Direct labor cost (3000*60)	$    180,000
Variable manufacturing overhead (3000*10)	$      30,000
Fixed manufacturing overhead	$    225,000
Cost of Goods manufactured	$    675,000
Add: Beginning Inventory of finished goods	$              -
Cost of Goods Available for Sale	$    675,000
Less: Ending Inventory of finished goods = 500 *(675000/3000)	$   (112,500)
COGS	$    562,500
Income Statement-Variable Costing
Sales [2500*350]		$           875,000
Less: Variable cost of goods sold:
Direct material cost (2500*80)	$    200,000
Direct labor cost (2500*60)	$    150,000
Variable manufacturing overhead (2500*10)	$      25,000
Variable selling expenses [2500*15]	$ 37,500	$           412,500
Contribution margin		$           462,500
Less: Fixed costs:
Production	$ 225,000
General and administration	$ 65,000	$           290,000
Net operating income		$           172,500