Homework Help Question & Answers

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:

  

Whitman Company
Income Statement
  Sales (42,000 units × $41.10 per unit) $ 1,726,200
  Cost of goods sold (42,000 units × $21 per unit) 882,000
  Gross margin 844,200
  Selling and administrative expenses 525,000
  Net operating income $ 319,200

  

The company’s selling and administrative expenses consist of $315,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $21 per unit product cost given above is computed as follows:

  

  Direct materials $ 9   
  Direct labor 3   
  Variable manufacturing overhead 4   
  Fixed manufacturing overhead ($250,000 ÷ 50,000 units) 5   
  Absorption costing unit product cost $ 21   

  

Required:
1.

Prepare the company’s income statement in the contribution format using variable costing.

Whitman Company Variable Costing Income Statement Variable Costing Sales $ 1,726,200 Variable expenses: Variable cost of goods sold Variable selling and administrative 0 1,726,200 Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative 0 Net operating income $ 1,726,200

          

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.

     

Whitman Company Variable Costing Income Statement Variable Costing Sales $ 1,726,200 Variable expenses: Variable cost of goods sold Variable selling and administrative 0 1,726,200 Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative 0 Net operating income $ 1,726,200
0 0
Report
Answer #1

1) Prepare the companvs income statement in the contribution format using variable costing as shown below: W Company Variabl2) Reconcile the difference between the net operating income as per variable costing and absorption costing as shown below: U

Know the answer?
Add Answer to:
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Your Answer: Your Name: What's your source?
Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...

    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 × $41.10 per unit) $ 1,602,900 Cost of goods sold (39,000 units × $24 per unit) 936,000 Gross margin 666,900 Selling and administrative expenses 487,500 Net operating income $ 179,400 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $5 per unit sold in variable expenses. The...

  • Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...

    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 (41,000 units × $42.10 per unit) $ 1,726,100 Cost of goods sold (41,000 units × $21 per unit) 861,000 Gross margin 865,100 Selling and administrative expenses 512,500 Net operating income $ 352,600 The company’s selling and administrative expenses consist of $307,500 per year in fixed expenses and $5 per unit sold in variable expenses. The...

  • Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...

    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 × $45.10 per unit) $ 1,758,900 Cost of goods sold (39,000 units × $22 per unit) 858,000 Gross margin 900,900 Selling and administrative expenses 448,500 Net operating income $ 452,400 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...

  • Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...

    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 (38,000 units × $43.60 per unit) $ 1,656,800 Cost of goods sold (38,000 units × $22 per unit) 836,000 Gross margin 820,800 Selling and administrative expenses 437,000 Net operating income $ 383,800 The company’s selling and administrative expenses consist of $285,000 per year in fixed expenses and $4 per unit sold in variable expenses. The...

  • Whitman Company has just completed its first year of operations. The company's absorption costing income statement...

    Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: Whitman Company Income Statement Sales (41,000 units * $41.10 per unit) Cost of goods sold (41,000 units * $24 per unit) $ 1,685,100 984,000 Gross margin Selling and administrative expenses 701,100 512,500 Net operating income $ 188,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $5 per unit sold in variable expenses....

  • Whitman Company has just completed its first year of operations. The company's absorption costing income statement...

    Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: $1,685,100 Whitman Company Income Statement Sales (41,000 units X $41.10 per unit) Cost of goods sold (41,000 units x $21 per unit) Gross margin Selling and administrative expenses Net operating income 861,000 824, 100 430, 500 393.600 $ The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $3 per unit sold in variable expenses....

  • Whitman Company has just completed its first year of operations. The company's absorption costing income statement...

    Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: Whitman Company Income Statement Sales (39,000 units * $42.10 per unit) Cost of goods sold (39,000 units * $22 per unit) $1,641,900 858,000 Gross margin Selling and administrative expenses 783,900 448,500 Net operating income $335,400 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 $22...

  • Whitman Company has just completed its first year of operations. The company's absorption costing income statement...

    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 $43.60 per unit) Cost of goods sold (39,000 units X $21 per unit) Gross margin Selling and administrative expenses Net operating income $1,700,400 819,000 881,400 409,500 $ 471,900 The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The $21...

  • Whitman Company has just completed its first year of operations. The company's absorption costing income statement...

    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 (41,000 units x $45.10 per unit) Cost of goods sold (41,000 units x $21 per unit) Gross margin Selling and administrative expenses Net operating income $1,849,100 861,000 9BB, 100 471,500 $ 516,600 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $4 per unit sold in variable expenses. The...

  • 8 Whitman Company has just completed its first year of operations. The company's absorption costing income...

    8 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 (41,000 units X $40.60 per unit) Cost of goods sold (41,000 units * $21 per unit) Gross margin Selling and administrative expenses Net operating income $1,664,689 861,080 803,680 430,500 373,100 s The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...

Free Homework App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.