Prepare a new income statement for the year using variable

Reference no: EM13597730

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 - 0
Units produced - 9,000
Units sold - 7,000
Sales - 100,000

Less Cost of Goods Sold

Beginning inventory - 0
Add Cost of goods manfuctured - 54,000
Goods available for sale - 54,000
Less ending inventory - 12,000
Cost of goods sold - 42,000
Gross margin - 58,000
Less selling and admin. expenses - 28,000
Net operating income - 30,000

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 andthevariable costing income statements.

Reference no: EM13597730

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