Answer:
Net Profit $ 823.8 millions
Explanation:
<u>Caterpillar Inc. </u>
<u>Variable Costing Income Statement (assumed)</u>
<u> For the Year Ended December 31 </u>
All figures in millions
Sales $38,537
Variable cost of goods sold:
Variable Beginning Inventory $ 6790
Add Variable Cost of Goods Manufactured $18723
Less Variable Ending Inventory $ 6029.8
Total Variable cost of goods sold: 19483.2
Manufacturing Margin 19053.8
Less Variable Admin. and Selling Exp.
(9730- 4000) 5730
Contribution Margin 13323.8
Less Fixed Costs
Less Fixed Cost of goods sold $ 8,500
Fixed Admin. and Selling expenses: $ 4000
Total Fixed Costs 12500
<u>Net Profit $ 823.8 millions</u>
<u>Working:</u>
First we find the variable cost of goods manufactured. For this we calculate the variable ending and beginning inventories.
Calculations
Fixed Beginning inventory 30% of $9,700= $ 2910
Variable Beginning Inventory= $9,700-$ 2910= $ 6790
Fixed Ending Inventory 30% of $ 8,614= $ 2584.2
Variable Ending Inventory= $ 8,614-$ 2584.2= $ 6029.8
Cost of goods sold $ 28,309
Add Ending Inventory 8,614
Less Beginning Inventory $9,700
Cost Of Goods Manufactured 27223
Less Manufacturing Fixed Costs 8500
Variable Cost of Goods Manufactured $ 18723
We subtract the fixed cost of goods sold and fixed selling expenses to get the net profit. In variable costing the fixed expenses are treated as a period cost rather than a product cost.
Total expenses $(38,039)
Fixed expenses: $ 4000
Variable expenses : $ 34039
