Reference no: EM132869462
Question - At the end of January, ABC firm had 3,400 units in ending inventory with a total cost of $19,040. During the month of February, ABC Company produced 36,000 units and sold 34,500. For the month, the firm prepared the following contribution format income statement.
Sales $307,050
Variable Manufacturing Costs 131,100
Variable S & A Costs 17,250
CM 158,700
Fixed Manufacturing 81,000
Fixed S & A 54,000
NI $23,700
Required -
1. Prepare a traditional format income statement assuming absorption costing.
2. Prepare the reconciliation between variable costing net income and absorption costing net income.
3. Suppose the firm wants to achieve a target NI of $50,000. How many units must it sell in order to achieve this goal (assume variable costing).
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