Question

Variable Costing Income Statement On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept: Joplin Company Absorption Costing Income Statement For the Month Ended April 30 Sales (275,000 units) $4,950,000 Cost of goods sold: Cost of goods manufactured (300,000 units) $4,050,000 Inventory, April 30 (25,000 units) (337,500) Total cost of goods sold (3,712,500) Gross profit $1,237,500 Selling and administrative expenses (275,000) Operating income $962,500 If the fixed manufacturing costs were $450,000 and the fixed selling and administrative expenses were $165,000, prepare an income statement according to the variable costing concept. Joplin Company Variable Costing Income Statement For the Month Ended April 30 $ Variable cost of goods sold: $ $ $ Fixed costs: $ $

Answer 1

Answer:

$625,250

Explanation:

JOPLIN COMPANY

Contribution Margin statement (Using variable costing approach)

Sales (a) 275,000 units*$18 per unit 4,950,000

Add:- Variable cost of goods manufactured 300,000 units*$13.09 per unit 3,927,000

Variable cost of goods available for sale

Less closing inventory

25,000 units*13.09 per unit ($327,250)

$3,927,000-$327,250=$3,599,750

(b)

Gross contribution margin C= a-b (4,950,000-$3,599,750) $1,350,250

Less:-Variable selling expenses ($275,000-$165,000) $110,000

Contribution margin ($1,350,250-$110,000) $1,240,250

Less:- Fixed costs

Manufacturing costs $450,000

Administrative expenses $165,000

Net Income($ $1,240,250-$450,000 =$70,250-$165,000) $625,250

Explanation- Unit product cost under variable costing

$4,050,000-$450,000/275,000

=3,600,000/275,000

=13.09 per unit

Answer 2

Answer:

JOPLIN COMPANY

                         VARIABLE COSTING INCOME STATEMENT

 Unit sold                                                                            275,000

Sales                                                                                 $4,950,000

Variable cost :

Cost of Goods sold( $4,050,000-337,500 - 450,000)  (3,262,500)

Selling and Administrative expense ( 275,000 - 165,000)  (110,000)

Contribution                                                                          1,577,500

Fixed Cost:

manufactured cost                                  450,000

Selling and administrative expenses     165,000                 615,000

Net Income                                                                             962,500

Explanation: