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Fanelli Corporation, a merchandising company, reported the following results for July:

Number of units sold 6,700
Selling price per unit $ 600
Unit cost of goods sold $ 419
Variable selling expense per unit $ 62
Total fixed selling expense $ 126,200
Variable administrative expense per unit $ 30
Total fixed administrative expense $ 208,100
Cost of goods sold is a variable cost in this company.

Required:

a. Prepare a traditional format income statement for July.

b. Prepare a contribution format income statement for July.

Respuesta :

ayokenny2001

Answer:

See below

Explanation:

1. Absorption costing income statement

Sales = 6,700 × $600 = $4,020,000

COGS = 6,700 × $419 = ($2,807,300)

Gross profit = $1,212,700

Total selling expenses = (6,700 × $62 + $126,200) = ($541,600)

Total administrative expenses = (6,100 × $30 + $208,100) = ($391,100)

Net operating income = $280,000

2. Variable costing income statement

Sales = $4,020,000

Total variable cost = 6,700 × ($419 + $62 + $30) = ($3,423,700)

Total contribution margin = $596,300

Total fixed selling expense = ($126,200)

Total administrative selling expense = ($208,100)

Net operating profit = $262,000

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