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Estimated Income Statements, and in and acting Por to the first month of operations ending October 31, Marshall tre estimated the following operating results Sales (28.000 598) 52.744,000 Manufacturing costs (28,000 units) Direct materials 1,660,400 Direct lobor 392.000 Variable factory overhead 184,800 Feed factory overhead 218,400 Fixed selling and administrative expenses 59.400 Variable selling and administrative expenses 79,900 The company is evaluating a proposal to manufacture 31,200 units instead of 28,000 units, thus creating an ending inventary of 3,200 units Manufacturing the additional units will not change sales, unt variable factory overhead costs, total wed factory overhead cont or totalt selling and administrative expenses a. 1. Prepare an estimated Income statement, comparing operating results if 28,000 and 31,200 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 28,000 Units Manufactured 31,200 Units Manufactured 2.74 Cost of goods sold Cost of goods manufactured 3,485.000 1.711.30 Inventory, October 31 27. Total cost of goods sold 2.4.0 2,433700 a. 1. Prepare an estimated income statement, comparing operating results it 28,000 and 31,200 units are manufactured in the absorption costing format. It an amount box does not require an entry leave it blank Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 28,000 Units Manufactured 31,200 Units Manufactured Sales 2,704 2.1 Cost of goods sold: Cost of goods manufactured 2.455.000 2,711, Inventory, October 31 2 Total cost of goods sold 2. 2,431.700 Gross profit BIO Selling and administrative expenses 131.300 Operating income 157.100 179.500 ERRA a. 2. Prepare an estimated income statement, comparing operating results is 25,000 and 31,200 units are manufactured in the variable conting format, If an amount box does not require an entry leave it blank. Marshall Inc Variable Costing Income Statement For the Month Ending October 31 28,000 Units Manufactured 31,200 Units Manufactured Sales Variable cost of goods sold Variable cost of goods manufactured I a. 2. Prepare an estimated Income statement, comparing operating regalo mu nis are manufacturing costing formation amount on does not require an entry leave it blank Marshall Inc Variable Costing Income Statement For the Month Ending October 31 28,000 Units Manufactured 31,200 Units Manufactured Sales Variable cost of goods sold Variable cost of goods manufactured Inventory, October 31 Total variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead Fixed selling and administrative expenses Total fixed costs Operating income din domini bini niin b. What is the reason for the difference in operating Income reported for the two levels of production by the absorption costing Income statement? The increase in income from operations under absorption costing is caused by the allocation of fixed factory overhead cost over a number of units. Thus, the cost of goods sold is less - The difference can also be explained by the amount of fixed factory overhead cost included in the ending inventory

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