Reference no: EM132515829

Income Statements under The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.Absorption and The concept that considers the cost of products manufactured to be composed only of those manufacturing costs that increase or decrease as the volume of production rises or falls (direct materials, direct labor, and variable factory overhead).Variable Costing

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month.

The following data summarize the results for August:

Sales (18,000 units)                    $2,340,000

Production costs (23,000 units):

Direct materials                     $1,106,300

Direct labor                            531,300

Variable factory overhead           264,500

Fixed factory overhead            177,100

                                             2,079,200

Selling and administrative expenses:

Variable selling and administrative expenses                $322,300

Fixed selling and administrative expenses                   124,800

                                                                         447,100

If required, round interim per-unit calculations to the nearest cent.

Sales - 2340000

Cost of goods sold - 1627200

Gross Profit - 712800

Selling and administrative expenses - 447100

Income from operations 265700

Question 1: Create the income statement according to the variable costing concept

Sales

Variable cost of goods sold

Manufacturing margin

Variable selling and administrative expenses

Contribution margin

Fixed costs

Fixed factory overhead

Fixed selling and administrative expenses

Total fixed costs

Income from operations