Topple Company produces a single product. Operating data for the company and its absorption costing
Topple Company produces a single product. Operating data for the company and its absorption costing income
statement for the last year are presented below.
| Units in beginning inventory | 2,000 |
| Units produced | 9,000 |
| Units sold | 10,000 |
| Sales | $100,000 |
Less cost of goods sold:
| Beginning inventory | 12,000 |
| Add cost of goods manufactured | 54,000 |
| Goods available for sale | 66,000 |
| Less ending inventory | 6,000 |
| Cost of goods sold | 60,000 |
| Gross margin | 40,000 |
| Less selling and admin. expenses | 28,000 |
| Net operating income | $12,000 |
Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totals $18,000 for the year. The fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
