Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. whitman company has just completed its first year

Whitman Company has just completed its first year of operations. The companys absorption costing income...

90.2K

Verified Solution

Question

Accounting

Whitman Company has just completed its first year of operations. The companys absorption costing income statement for the year follows:

Whitman Company Income Statement
Sales (42,000 units $43.10 per unit) $ 1,810,200
Cost of goods sold (42,000 units $24 per unit) 1,008,000
Gross margin 802,200
Selling and administrative expenses 525,000
Net operating income $ 277,200

The companys selling and administrative expenses consist of $315,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows:

Direct materials $ 11
Direct labor 4
Variable manufacturing overhead 4
Fixed manufacturing overhead ($255,000 51,000 units) 5
Absorption costing unit product cost $ 24

Required:

1. Redo the companys income statement in the contribution format using variable costing.

2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Psychology
1.2K views

Should each state have the flexibility to create individual policies regarding abortion or other health services?...

Mechanical Engineering
1.2K views

An air-conditioned zone is at 72°F and 40% relative humidity. The total heating load of the...

General Management
1.2K views

HR Management-May I please have your expert opinion on the effect of glass ceiling on women's...

General Management
1.2K views

The sales and marketing section offers a detailed explanation of your sales strategy, pricing plan, proposed...

Physics
1.2K views

4 Change will depend upon velocity A body of mass 2 kg is hung on...

Basic Math
1.2K views

5 Let 8 be an angle such that tan0 and esc00 12 Find the exact...

Statistics
1.2K views

Some questions supply a data set like the one below which must be used in...

Accounting
1.2K views

Tina acquires an oil and gas property interest for $200,000 in the current...

Accounting
1.2K views

Thornton Books buys books and magazines directly from publishers and distributes them to grocery stores....

Accounting
1.2K views

You have just been hired as a loan officer at Fairfield State Bank. Your supervisor...

Accounting
1.2K views

Description of the Organization: The Kids Planet Club is a (fictitious), tax-exempt entity under IRC...

Accounting
1.2K views

Comments This problem continues a thread from Bob's Chocolate. In Bob's, we observed that the...