Prepare a variable costing income statement

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Question - Variable Costing Income Statement - On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

Sales (96,000 units)


$4,440,000

Cost of goods sold:



Cost of goods manufactured

$3,120,000


Less ending inventory (24,000 units)

624,000


Cost of goods sold


2,496,000

Gross profit


$1,944,000

Selling and administrative expenses


288,000

Income from operations


$1,656,000

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

b. Reconcile the absorption costing income from operations of $1,656,000 with the variable costing income from operations determined in (a).

Reference no: EM133148174

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