29 Jun Question 3.(TCO E) Topple Company pro
Question
3.(TCO E) Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:
Units in beginning inventory
0
Units produced
9,000
Units sold
7,000
Sales
$100,000
Less cost of goods sold:
Beginning inventory
0
Add cost of goods manufactured
54,000
Goods available for sale
54,000
Less ending inventory
12,000
Cost of goods sold
42,000
Gross margin
58,000
Less selling and admin. expenses
28,000
Net operating income
$30,000
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements. (Points : 30)
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