Ask Question
21 December, 14:04

allatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (4,000 units) $2,600,000 Production costs (4,350 units) : Direct materials$1,218,000 Direct labor522,000 Variable factory overhead87,000 Fixed factory overhead130,500 1,957,500 Selling and administrative expenses: Variable selling and administrative expenses$60,000 Fixed selling and administrative expenses25,000 85,000 a. Prepare an income statement according to the absorption costing concept.

+1
Answers (1)
  1. 21 December, 14:45
    0
    Sales 2,600,000

    Less Cost of Goods Sold

    Opening Stock 0

    Add Cost of Goods Manufactured

    Direct materials 1,218,000

    Direct labor 522,000

    Variable factory overhead 87,000

    Fixed factory overhead 130,500

    Less Closing Stock (350 * (1,957,500/4,350) (157,500) (1,800,000)

    Gross Profit 800,000

    Less Expenses

    Selling and administrative expenses:

    Variable selling and administrative expenses (60,000)

    Fixed selling and administrative expenses (25,000)

    Net Income 715,000

    Explanation:

    Product Cost (Absorption Costing) = Direct Materials + Direct Labor + Variable Overhead + Fixed Overheads

    Period Cost (Absorption Costing) = All Non - Manufacturing Overheads
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “allatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers