Reference no: EM132881701

Problem - Absorption costing income statement - On June 30, 2012, the end of the first month of operations, Volker Manufacturing Co. prepared the following income statement, based on the variable costing concept:

Sales (210,000 units) $2,300,000

Variable cost of goods sold:

Variable cost of goods manufactured (250,000 units × $10 per unit) $2,500,000

Less ending inventory (40,000 units × $10 per unit) 400,000

Variable cost of goods sold 2,100,000

Manufacturing margin $200,000

Variable selling and administrative expenses 44,000

Contribution margin $156,000

Fixed costs:

Fixed manufacturing costs $72,500

Fixed selling and administrative expenses 45,000 117,500

Income from operations $38,500

Required -

a. Prepare an absorption costing income statement.

b. Reconcile the variable costing income from operations of $38,500 with the absorption costing income from operations determined in (a).