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Act202 Section:16

Spring 2020

Name: Farhadul Islam


ID:1811438030
Serial NO:13
Submitted to: RMH1
Final Assignment Part 3 answers.
Answers:

a) Unit production costs under variable costing:

Direct materials $28

Direct labor $49

Variable Manufacturing overhead $7

Variable costing unit production cost $84

b)

Income statement using contribution method:

Michonne Company

Contribution format income statement for the month Jan 31, 2020

Sales (4300*$155) 6,66,500

-Variable expenses ($28+$49+$7+$7)*4300 3,91,300

Contribution margin 2,75,200

-Fixed Cost (1,75,500+81700) 2,57200

Net operating income $18000

So, by using contribution format income statement, we can see that the company is
making a profit of $18000 in January 31, 2020
Income statement using variable costing method:

Michonne Company

Variable costing method income statement for Jan 31, 2020

$ $

Sales (4300*$155) 6,66,500

-Variable Expenses:

Variable Cost of good sold (4300*$84) 3,61,200

Variable Selling and Administrative

expenses (4300*$7) 30,100

391300

Contribution Margin 2,75,200

-Fixed expense:

Fixed manufacturing overhead 1,75,500

Fixed selling and administrative 81,700

2,57,200

Net operating income $18,000

By following variable costing method income statement, we can see that, the company
is making profit of $18000 in 31 January, 2020.
c)

Absorption costing net operating income for the month without using Income Statement:

Total unit produced= 4500

Total unit sold = 4300

Sales revenue (155*4300) 6,66,500

Direct Material (28*4300) 1,20,400

Direct Labor (49*4300) 2,10,700

Variable Manufacturing overhead (7*4300) 30,100

Fixed Manufacturing overhead* 1,67,700

Fixed Selling and Administrative expenses 81,700

Operating profit $55,900

*Fixed manufacturing overhead = (1,75,500/4500)*4300

= 39*4300

=1,67,700

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