Question: During the first month of operations ended March 31, 2016, Hip and Conscious Clothing Company produced 56,250 designer cowboy hats, of which 52,950 were sold. Operating data for the month are summarized as follows:
|
1
|
Sales
|
|
$794,250.00
|
|
2
|
Manufacturing costs:
|
|
|
|
3
|
Direct materials
|
$416,250.00
|
|
|
4
|
Direct labor
|
135,000.00
|
|
|
5
|
Variable manufacturing cost
|
61,875.00
|
|
|
6
|
Fixed manufacturing cost
|
56,250.00
|
669,375.00
|
|
7
|
Selling and administrative expenses:
|
|
|
|
8
|
Variable
|
$31,770.00
|
|
|
9
|
Fixed
|
26,475.00
|
58,245.00
|
During April, Hip and Conscious Clothing produced 49,650 designer cowboy hats and sold 52,950 cowboy hats. Operating data for April are summarized as follows:
|
1
|
Sales
|
|
$794,250.00
|
|
2
|
Manufacturing costs:
|
|
|
|
3
|
Direct materials
|
$367,410.00
|
|
|
4
|
Direct labor
|
119,160.00
|
|
|
5
|
Variable manufacturing cost
|
54,615.00
|
|
|
6
|
Fixed manufacturing cost
|
56,250.00
|
597,435.00
|
|
7
|
Selling and administrative expenses:
|
|
|
|
8
|
Variable
|
$31,770.00
|
|
|
9
|
Fixed
|
26,475.00
|
58,245.00
|
Required: 1. Using the absorption costing concept, prepare income statements for
(a) March and
(b) April.
2. Using the variable costing concept, prepare income statements for
(a) March and
(b) April.