Answer:
Underwater University Variable Costing Income Statement For the Fall Term:
Actual Planned Variance
Number of Enrollment 4,500 4,125 375
Credit hours 60,450 43,200 17,250
Revenue $7,254,000 $5,832,000 $1,422,000
Variable costs:
Registration, records,
& marketing costs $1, 237,500 $1,134,375 $103,125
Instructional costs 3,868,800 2,592,000 1,276,800
Total variable costs $5,106,300 $3,726,375 $1,379,925
Contribution margin $2,147,700 $2,105,625 $42,075
Depreciation on classrooms
& equipment $825,600 $825,600 $0
Operating income $1,322,100 $1,280,025 $42,075
Explanation:
Variable costing income statement is an income statement which shows the contribution that revenue makes in paying for the fixed costs, before arriving at the Operating Income. In variable costing, there is a separation of variable costs from periodic or fixed costs. All direct materials, labor, and variable overheads are charged to the variable costs, while fixed costs are expensed to the period for which they are incurred.
