banner
  • Denton Company - Variable Costing Income Statement
tab-top
Admin

Denton Company - Variable Costing Income Statement - 20 Oct, 2012

During Denton Company's first two years of operations, the company reported absorption costing net operating income as follows:

 

DENTON COMPANY

 

 

Income Statement

 

 

 

Year 1

Year 2

Sales ($50 per unit)

      1,000,000

   1,500,000

Cost of goods sold ($34 per unit)

        680,000

   1,020,000

Gross margin

        320,000

     480,000

Selling and administrative costs*

        310,000

     340,000

Net operating income

          10,000

     140,000

 

* $3 per unit variable and $250,000 fixed

 

The company' s $34 unit product cost is computed as follows:

Direct materials                                                             $ 8

Direct labor                                                                              10

Variable manufacturing overhead                                               2

Fixed manufacturing overhead ($350,000 / 25,000 units)           14

Unit product cost                                                                      $34

Production and cost data for the two years are given below:

 

Year 1             Year 2

Units produced                         25,000             25,000

Units sold                                 20,000             30,000

 

Required:

1. Prepare a variable costing income statement for each year in the contribution format.

 

2. Reconcile the absorption costing and variable costing net operating income figures for each year.



Category : Management Accounting

Search Keywords :
Denton , Variable , Costing , Income , Statement , Reconcile , Contribution , Format 


Downloaded :
10


Answer  - 20 Oct, 2012
Please see the excel attachment....


Rating :5
Credits can be purchased using Manage Credits option after log in
tab-bottom