Reference no: EM132957432
Absorption and variable costing income statements
During the first month of operations ended August 31, Kodiak Fridgeration Company manu-factured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows:
Sales .................................................................. $10,800,000
Manufacturing costs:
Direct materials ...................................................... $6,400,000
Direct labor ......................................................... $1,600,000
Variable manufacturing cost ..................... $1,280,000
Fixed manufacturing cost ................................. $320,000 $9,600,000
Selling and administrative expenses:
Variable ............................................................. $1,080,000
Fixed ................................................................ $ 180,000 $1,260,000
Instructions
Problem 1. Prepare an income statement based on the absorption costing concept.
Problem 2. Prepare an income statement based on the variable costing concept.
Problem 3. Explain the reason for the difference in the amount of income from operations reported in (1) and (2).
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