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E G H D 1 Problem 2 2 3 Walsh Company manufactures 30,000 units during July 4 There were no units in inventory on July 1. s Informatin on costs and expenses for July is as follows: 6 7 Total $ Number of units Unit $ 8 Manufacturing costs Variable 660,000 30,000 22 10 Fixed 300,000 30.000 10 11 Total manufacturing costs 960,000 12 Selling and Administrative expenses 13 Variable 200,000 25,000 8 14 Fixed 160,000 is Total selling and administrative expenses 360,000 16 17 Required: 18 If the company sells 25,000 units at $75 (units manufactured exceeds units sold). 19 prepare an income statement for July using: 20 A Absorption Costing 21 B. Varibale Costing 22 23 Solution: 24 A. 25 Absorption Costing Income Statement $ $ 26 Sales 27 Costs of Goods Sold 28 Costs of Goods Manufactured 29 Less Ending Inventory 30 Total Costs of Goods Sold 31 Gross Profit 32 less Seling and Administrative expenses 33 Income from Operation 34 35 B. 35 Variable Costing Income Statement 37 Sales 33 Variable costs of Goods Sold 39 Variable Manufacturing costs -40 less Ending Inventory 41 Total Variable COGS 42 Manufacturing Margin 43 Less Variable Selling and Administrative Expenses 44 Contribution margin 45 Less Fixed costs -46 Fixed manufacturing costs 47 Fixed Selling and Administrative expenses 43 Total Fixed costs 49 Income from Operation 50

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