Question

During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 46,000 mini refrigerators, of which 40,000 were sold. Operating data for the month are summarized as follows:
Sales $8,800,000.00
Manufacturing costs:
Direct materials $3,450,000.00
Direct labor 1,196,000.00
Variable manufacturing cost 782,000.00
Fixed manufacturing cost 598,000.00 6,026,000.00
Selling and administrative expenses:
Variable $600,000.00
Fixed 320,000.00 920,000.00

Prepare an income statement based on the variable costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.

Answer 1

Answer:

                                                                     $

Sales                                                       8,800,000

Less: Cost of goods sold (W1)               5,241,739.13

Contribution                                          3,558,260.87

Less: Fixed manufacturing cost               598,000

Less: Fixed selling and admin cost          320,000

Net Income                                            2,640,260.87

(W1) Cost of goods sold

Direct Material                                  3,450,000

Direct Labour                                    1,196,000

Variable manufacturing cost              782,000

Variable selling cost                            600,000

Total variable cost                            6,028,000

Less:closing inventory                     786,260.87 (6,028,000/46,000*6,000)

COST OF GOODS SOLD                  5,241,739.13