AJ Manufacturing Company incurred $54,000 of fixed product cost and $43,200 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,200 of fixed selling and administrative costs and $13,800 of variable selling and administrative costs. The company sold all of the units it produced for $176,000.

Required

a.

Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).

Question

Business

Ice Queen

7 July, 16:34

AJ Manufacturing Company incurred $54,000 of fixed product cost and $43,200 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,200 of fixed selling and administrative costs and $13,800 of variable selling and administrative costs. The company sold all of the units it produced for $176,000.

Required

a.

Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).

+3

Answers (1)

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Selena Howell · Answer 1

The preparation of the income statement is presented below using the generally accepted accounting Principles (GAAP):

Sales $176,000

Less: Cost of goods sold ($97,200) ($54,000 + $43,200)

Gross margin $78,800

Less: Selling and administrative cost ($31,000) ($17,200 + $13,800)

Net income $47,800

Hence, we considered all the given information