Question

Prepare an income statement under absorption costing. Round all final answers to whole dollars. Sullivan Equipment Company Absorption Costing Income Statement For the Month Ended March 31 Sales $ 653,200 Cost of goods sold: Cost of goods manufactured $ 352,000 Inventory, March 31 38,880 Total cost of goods sold 313,120 Gross profit $ 340,080 Selling and administrative expenses 234,400 Income from operations $ 574,480

Answer 1

Answer:

Income Statement For the Month Ended March 31

Sales                                                                    $ 653,200

Cost of goods sold:

Cost of goods manufactured    $ 352,000

Less Inventory, March 31            ($ 38,880)

Total cost of goods sold                                     ($ 313,120)

Gross profit                                                         $ 340,080

Less Expenses :

Selling and administrative expenses              ($ 234,400)

Income from operations                                     $ 105,680

Explanation:

The Product cost in absorption costing includes All Manufacturing Costs. All Non-Manufacturing Costs are treated as Period Costs that are Expensed during the period of Operation.