Topple Company_Variable costing
Green Mountain Resort
June 4, 2020Imagine that you are being interviewed by a graduating high school
June 4, 2020Topple Company_Variable costing
3.(TCO E) Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:
| Units in beginning inventory | 0 |
| Units produced | 9,000 |
| Units sold | 7,000 |
| Sales | $100,000 |
Less cost of goods sold:
| Beginning inventory | 0 |
| Add cost of goods manufactured | 54,000 |
| Goods available for sale | 54,000 |
| Less ending inventory | 12,000 |
| Cost of goods sold | 42,000 |
| Gross margin | 58,000 |
| Less selling and admin. expenses | 28,000 |
| Net operating income | $30,000 |
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements. (Points : 30)
