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Exercise 6-2(Algo) Variable Costing Income Statement; Explanation of Difference in Net Operating Income [LO6-2] ...

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Accounting

Exercise 6-2(Algo) Variable Costing Income Statement; Explanation of Difference in Net Operating Income [LO6-2]
Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $950. Selected data for the companys operations last year follow:
Units in beginning inventory 0
Units produced 250
Units sold 230
Units in ending inventory 20
Variable costs per unit:
Direct materials $ 125
Direct labor $ 335
Variable manufacturing overhead $ 55
Variable selling and administrative $ 30
Fixed costs:
Fixed manufacturing overhead $ 75,000
Fixed selling and administrative $ 15,000
The absorption costing income statement prepared by the companys accountant for last year appears below:
Sales $ 218,500
Cost of goods sold 187,450
Gross margin 31,050
Selling and administrative expense 21,900
Net operating income $ 9,150
Required:
2. Prepare an income statement for last year using variable costing.

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