To prepare a variable costing income statement for Joplin Company, we need to calculate the variable cost of goods sold (COGS) and variable selling and administrative expenses for the month ended April 30. Let's start by organizing the information we have and calculating the necessary figures.
Given Data
- Sales: $125,400 (for 3,300 units)
- Cost of goods manufactured (absorption): $105,138 (for 3,894 units)
- Cost of goods sold (absorption): $89,100
- Ending inventory (absorption): $16,038 (for 594 units)
- Fixed manufacturing costs: $25,233.12
- Fixed selling and administrative expenses: $10,520
Step 1: Calculate the Variable Cost of Goods Manufactured
We know that:
- Total COGS (Absorption) = Cost of goods manufactured (Absorption) - Ending inventory (Absorption)
To find the variable cost of goods manufactured, we can calculate it based on the absorption COGS and the fixed portion.
Step 1.1: Determine the variable cost per unit:
-
Variable COGS can be derived from Total COGS:
- Total Cost of Goods Manufactured - Fixed Manufacturing Costs = Variable Cost of Goods Manufactured
Thus: \[ \text{Variable COGS} = \text{Cost of Goods Manufactured} - \text{Fixed Manufacturing Costs} \] \[ \text{Variable COGS} = 105,138 - 25,233.12 = 79,904.88 \]
Step 2: Calculate Total Variable Cost of Goods Sold
The total variable cost of goods sold is equal to the variable cost of goods manufactured, proportionally allocated to the number of units sold.
Step 2.1: Find the variable cost per unit:
- Variable Cost per Unit = Total Variable Cost of Goods Manufactured / Total Units Manufactured \[ \text{Variable Cost per Unit} = \frac{79,904.88}{3,894} \approx 20.51 \text{ per unit} \]
Step 2.2: Find the total variable cost of goods sold:
- Total Variable COGS = Variable Cost per Unit \times Number of Units Sold \[ \text{Total Variable COGS} = 20.51 \times 3,300 \approx 67,683 \]
Step 3: Calculate Variable Selling and Administrative Expenses
Assuming all selling and administrative expenses incurred are variable (since not specified otherwise), the given fixed selling and administrative costs will not be included in variable costing.
Step 3.1: Calculate Variable Selling and Administrative Expenses: From the Absorption Costing Income Statement: Given Total Selling and Administrative Expenses: $21,480 Thus, we can assume the variable portions are included as fixed costs are separated out. Therefore, it stays the same:
- Variable Selling and Administrative Expenses = Total Selling and Administrative Expenses = $21,480
Step 4: Prepare the Variable Costing Income Statement
Now we can compile the Variable Costing Income Statement.
Joplin Company Variable Costing Income Statement For the Month Ended April 30
| Line Item Description | Amount | |------------------------------------------|--------------| | Sales | $125,400 | | Variable cost of goods sold: | | | Variable cost of goods manufactured | $79,904.88 | | - Inventory, April 30 | (16,038) | | Total variable cost of goods sold | $67,683 | | Manufacturing margin | $57,717 | | Variable selling and administrative expenses | $21,480 | | Contribution margin | $36,237 | | Fixed costs: | | | Fixed manufacturing costs | $25,233.12 | | Fixed selling and administrative expenses | $10,520 | | Total fixed costs | $35,753.12 | | Operating income | $484 |
Summary
So the operating income under variable costing for Joplin Company is $484, with the costs organized accordingly.