Redo company income statement in contribution format

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Question - Variable Costing Income Statement; Reconciliation

Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows:

Whitman Company Income Statement

Sales (39,000 units x $44.10 per unit)

$1,719,900

Cost of goods sold (39,000 unit x $22 per unit)

858,000

Gross margin

861,900

Selling and administrative expenses

448,500

Net operating income

$413,400

The company's selling and administrative expenses consist of $292,500 per year in feed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows:

Direct materials

$11

Direct labor

4

Variable manufacturing overhead

3

Fixed manufacturing overhead ($184,000 ÷ 46,000 units)

4

Absorption costing unit product cost

$22

1. Redo the company's income statement in the contribution format using variable costing.

2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.

Reference no: EM131697847

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