Problem
On June 30, 2016, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept:
Tudor Manufacturing Co.
Income Statement - Variable Costing
For the Month Ended June 30, 2016
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1
|
Sales (405,000 units)
|
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$6,385,000.00
|
|
2
|
Variable cost of goods sold:
|
|
|
|
3
|
Variable cost of goods manufactured (500,000 units × $12 per unit)
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$6,000,000.00
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|
|
4
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Less ending inventory (95,000 units × $12 per unit)
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1,140,000.00
|
|
|
5
|
Variable cost of goods sold
|
|
4,860,000.00
|
|
6
|
Manufacturing margin
|
|
$1,525,000.00
|
|
7
|
Variable selling and administrative expenses
|
|
88,000.00
|
|
8
|
Contribution margin
|
|
$1,437,000.00
|
|
9
|
Fixed costs:
|
|
|
|
10
|
Fixed manufacturing costs
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$140,000.00
|
|
|
11
|
Fixed selling and administrative expenses
|
68,000.00
|
208,000.00
|
|
12
|
Income from operations
|
|
$1,229,000.00
|
Required:
A. Prepare an absorption costing income statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Less" or "Plus" and colons will automatically appear if it is required. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.
B. Reconcile the variable costing income from operations of $1,229,000 with the absorption costing income from operations determined in (A). Enter all amounts as positive numbers.