Business, 05.05.2020 05:01 zeinabelsiblini

Ncome Statements under Absorption Costing and Variable Costing

Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (150,000 units) during the first month, creating an ending inventory of 20,000 units. During February, the company produced 130,000 units during the month but sold 150,000 units at $500 per unit. The February manufacturing costs and selling and administrative expenses were as follows:

Number of Units Unit Cost Total Cost
Manufacturing costs in February 1 beginning inventory:
Variable 20,000 $275.00 $5,500,000
Fixed 20,000 26.00 520,000
$301.00 $6,020,000
Total Manufacturing costs in February:
Variable 130,000 $275.00 $35,750,000
Fixed 130,000 30.00 3,900,000
$305.00 $39,650,000
Total Selling and administrative expenses in February:
Variable 150,000 $20.00 $3,000,000
Fixed 150,000 1.30 195,000
$21.30 $3,195,000

Prepare an income statement according to the absorption costing concept for the month ending February 28.

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Ncome Statements under Absorption Costing and Variable Costing

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