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15 September, 15:55

The following data are from the accounting records of Niles Castings for year 2: Units produced and sold 80,000 Total revenues and costs Sales revenue $ 270,000 Direct materials costs 63,000 Direct labor costs 33,000 Variable manufacturing overhead 18,000 Fixed manufacturing overhead 41,000 Variable marketing and administrative costs 11,500 Fixed marketing and administrative costs 38,000Required:a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement

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  1. 15 September, 19:52
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    Gross Margin = $ 115,000 Contribution Margin = $ 144,500

    Explanation:

    Nile Castings

    Income Statement

    Year 2

    Sales Revenue $ 270,000

    Direct Materials $63,000

    Direct Labor $ 33,000

    Variable Manufacturing Overheads $ 18,000

    Fixed Manufacturing Costs $ 41,000

    Gross Margin $ 115,000

    Less Marketing & Administrative Costs

    Fixed Marketing Costs $ 38,000

    Variable Marketing Costs $ 11,500

    Net Profit $ 65,500

    Nile Castings

    Income Statement Under Absorption Method

    Year 2

    Sales Revenue $ 270,000

    Direct Materials $63,000

    Direct Labor $ 33,000

    Variable Manufacturing Overheads $ 18,000

    Variable Marketing & Administrative Costs $ 11,500

    Contribution Margin $ 144,500

    Less Fixed Costs

    Fixed Manufacturing Costs $ 41,000

    Fixed Marketing Coss $ 38,000

    Net Profit $ 65,500
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