Variable manufacturing costs are 4 per unit fixed factory

Reference no: EM13590590

Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:

Units in beginning inventory...2000
Units produced ....9,000
Units sold .......10,000
Sales..... $100,000

Less cost of goods sold:

Beginning inventory 12,000
Add cost of goods manufactured .....54,000
Goods available for sale..... 66,000
Less ending inventory.... 6,000
Cost of goods sold ....60,000
Gross margin.... 40,000
Less selling & admin. expenses ...28,000
Net operating income.. $12,000

Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.

Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.

Reference no: EM13590590

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