Solution-Define variable costing income statement

Define variable costing income statement

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Reference no: EM13487264

Variable costs = 56% of sales
Fixed costs = $187,100
Management's net income goal = $82,092

Contribution margin ratio = (100%-variable cost percentage)
Contribution margin ratio = (100%-56%)
Contribution margin ratio = 54%

Required sales to reach target income of $82,092 = (Total fixed cost + Target income)/(Contribution margin ratio)
Required sales to reach target income of $82,092 = (187100+82092)/54%
Required sales to reach target income of $82,092 = $498,503.7
Answer wrong according to book

a) Manufacturing cost per unit (variable costing) = Direct material + Direct labor + Variable manufacturing overhead
Manufacturing cost per unit (variable costing) = $7.73 + $2.52 + $5.92
Manufacturing cost per unit (variable costing) = $16.17 per unit

b) Variable costing income statement:-

POLK COMPANY
Income statement
For the year ended December 31, 2012
Variable costing

Have to show debit and credit columns	Categories Wrong
	Amt.
Sales	$ 2,060,000.0
Less: Variable costs	$ 1,615,200.0

Contribution margin	$ 444,800.0
Less: Fixed costs	$ 450,503.0

Operating profit	$ (5,703.0)

Reference no: EM13487264

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Define variable costing income statement

Reference no: EM13487264

Reference no: EM13487264

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