Question
On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept:
Joplin Company
Absorption Costing Income Statement
For the Month Ended April 30
Line Item Description Amount Amount
Sales (3,300 units) $125,400
Cost of goods sold:
Cost of goods manufactured (3,894 units) $105,138
Inventory, April 30 (594 units) (16,038)
Total cost of goods sold (89,100)
Gross profit $36,300
Selling and administrative expenses (21,480)
Operating income $14,820
If the fixed manufacturing costs were $25,233.12 and the fixed selling and administrative expenses were $10,520, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.
Make me a Variable costing income statement with inventory april 30, total variable cost of goods sold, manufacturing margin, contribution margin, and operating income
Joplin Company
Absorption Costing Income Statement
For the Month Ended April 30
Line Item Description Amount Amount
Sales (3,300 units) $125,400
Cost of goods sold:
Cost of goods manufactured (3,894 units) $105,138
Inventory, April 30 (594 units) (16,038)
Total cost of goods sold (89,100)
Gross profit $36,300
Selling and administrative expenses (21,480)
Operating income $14,820
If the fixed manufacturing costs were $25,233.12 and the fixed selling and administrative expenses were $10,520, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.
Make me a Variable costing income statement with inventory april 30, total variable cost of goods sold, manufacturing margin, contribution margin, and operating income
Answers
GPT-4o mini
To prepare a variable costing income statement, we need to distinguish between variable and fixed costs. Under variable costing, only variable manufacturing costs are included in the cost of goods sold, whereas fixed manufacturing costs are treated as period expenses.
Here's the breakdown of the information provided:
1. **Sales Revenue**: $125,400 from 3,300 units sold.
2. **Cost of Goods Manufactured**: $105,138 for 3,894 units.
3. **Ending Inventory**: 594 units valued at $16,038.
4. **Fixed Manufacturing Costs**: $25,233.12.
5. **Selling and Administrative Expenses**: Total $21,480 (we assume portions of this are fixed).
6. **Fixed Selling & Administrative Expenses**: $10,520.
Let’s calculate the variable costs:
### Step 1: Calculate Variable Cost of Goods Sold (COGS)
First, we need to determine the variable cost per unit. From the absorption costing method:
- Total Cost of Goods Manufactured (Absorption) = $105,138
- Fixed Manufacturing Costs include costs that are not part of the variable cost of goods sold.
The variable manufacturing cost can be calculated as follows:
- **Variable Cost of Goods Manufactured** = Total COGM - Fixed Manufacturing Costs
- Variable Cost = $105,138 - $25,233.12 = $79,904.88
Now we can calculate the variable cost per unit manufactured:
- Variable Cost per Unit = Variable Cost of Goods Manufactured / Total Units Manufactured
- Variable Cost per Unit = $79,904.88 / 3,894 units ≈ $20.48 per unit.
Next, we calculate the Total Variable Cost of Goods Sold:
- Units Sold = 3,300
- Total Variable COGS = Variable Cost per Unit × Units Sold
- Total Variable COGS = $20.48 × 3,300 = $67,584.
### Step 2: Calculate Ending Inventory under Variable Costing
Now, let's calculate the variable cost for the ending inventory.
- Variable Cost of Ending Inventory = Variable Cost per Unit × Ending Inventory Units
- Variable Cost of Ending Inventory = $20.48 × 594 = $12,184.32.
### Step 3: Prepare the Variable Costing Income Statement
Now we can prepare the income statement using the variable costing concept.
**Joplin Company**
**Variable Costing Income Statement**
**For the Month Ended April 30**
| Line Item Description | Amount |
|---------------------------------------------|--------------|
| Sales (3,300 units) | $125,400 |
| Variable Cost of Goods Sold | |
| Total Variable COGS (3,300 units) | (67,584) |
| **Manufacturing Margin** | $57,816 |
| Selling and Administrative Expenses | |
| Variable Selling & Admin Expenses | (10,960) | *(Total - Fixed selling & admin) |
| **Contribution Margin** | $46,856 |
| Fixed Selling & Administrative Expenses | (10,520) |
| Fixed Manufacturing Costs | (25,233) |
| **Operating Income** | $11,103 |
### Final Summary
- **Ending Inventory**: $12,184 (Not directly shown in the income statement, but calculated).
- **Total Variable Cost of Goods Sold**: $67,584.
- **Manufacturing Margin**: $57,816.
- **Contribution Margin**: $46,856.
- **Operating Income**: $11,103.
This is the variable costing income statement and the attached calculations as per your request. Adjust as necessary for any specific formatting or additional required details!
Here's the breakdown of the information provided:
1. **Sales Revenue**: $125,400 from 3,300 units sold.
2. **Cost of Goods Manufactured**: $105,138 for 3,894 units.
3. **Ending Inventory**: 594 units valued at $16,038.
4. **Fixed Manufacturing Costs**: $25,233.12.
5. **Selling and Administrative Expenses**: Total $21,480 (we assume portions of this are fixed).
6. **Fixed Selling & Administrative Expenses**: $10,520.
Let’s calculate the variable costs:
### Step 1: Calculate Variable Cost of Goods Sold (COGS)
First, we need to determine the variable cost per unit. From the absorption costing method:
- Total Cost of Goods Manufactured (Absorption) = $105,138
- Fixed Manufacturing Costs include costs that are not part of the variable cost of goods sold.
The variable manufacturing cost can be calculated as follows:
- **Variable Cost of Goods Manufactured** = Total COGM - Fixed Manufacturing Costs
- Variable Cost = $105,138 - $25,233.12 = $79,904.88
Now we can calculate the variable cost per unit manufactured:
- Variable Cost per Unit = Variable Cost of Goods Manufactured / Total Units Manufactured
- Variable Cost per Unit = $79,904.88 / 3,894 units ≈ $20.48 per unit.
Next, we calculate the Total Variable Cost of Goods Sold:
- Units Sold = 3,300
- Total Variable COGS = Variable Cost per Unit × Units Sold
- Total Variable COGS = $20.48 × 3,300 = $67,584.
### Step 2: Calculate Ending Inventory under Variable Costing
Now, let's calculate the variable cost for the ending inventory.
- Variable Cost of Ending Inventory = Variable Cost per Unit × Ending Inventory Units
- Variable Cost of Ending Inventory = $20.48 × 594 = $12,184.32.
### Step 3: Prepare the Variable Costing Income Statement
Now we can prepare the income statement using the variable costing concept.
**Joplin Company**
**Variable Costing Income Statement**
**For the Month Ended April 30**
| Line Item Description | Amount |
|---------------------------------------------|--------------|
| Sales (3,300 units) | $125,400 |
| Variable Cost of Goods Sold | |
| Total Variable COGS (3,300 units) | (67,584) |
| **Manufacturing Margin** | $57,816 |
| Selling and Administrative Expenses | |
| Variable Selling & Admin Expenses | (10,960) | *(Total - Fixed selling & admin) |
| **Contribution Margin** | $46,856 |
| Fixed Selling & Administrative Expenses | (10,520) |
| Fixed Manufacturing Costs | (25,233) |
| **Operating Income** | $11,103 |
### Final Summary
- **Ending Inventory**: $12,184 (Not directly shown in the income statement, but calculated).
- **Total Variable Cost of Goods Sold**: $67,584.
- **Manufacturing Margin**: $57,816.
- **Contribution Margin**: $46,856.
- **Operating Income**: $11,103.
This is the variable costing income statement and the attached calculations as per your request. Adjust as necessary for any specific formatting or additional required details!