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Prepare a variable costing income statement

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Reference no: EM132685836

Problem - Variable Costing Income Statement

The following data were adapted from a recent income statement of Procter & Gamble Company: (in millions)

Net sales $78,938

Operating costs:

Cost of products sold $37,919

Marketing, administrative, and other expenses 24,998

Total operating costs $62,917

Income from operations $16,021

Assume that the variable amount of each category of operating costs is as follows: (in millions)

Cost of products sold $21,230

Marketing, administrative, and other expenses 10,000

Required -

a. Based on the above data, prepare a variable costing income statement for Procter & Gamble Company, assuming that the company maintained constant inventory levels during the period.

b. If Procter & Gamble reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing?

Reference no: EM132685836

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