Sales

Variable expenses:
Variable cost of goods sold (P2)
Variable selling and administrative (P1)
Total variable expense
Contribution margin (Sales - Variable Costs)
Fixed costs:
Fixed manufacturing overhead
Fixed selling and administrative
Total fixed expenses:
Net income

Fixed manufacturing overhead

units produced
Fixed manufacturing overhead per unit
Variable manufacturing costs
Unit costs - Absorption costing
Cost of goods sold

Units in ending inventory

Fixed manufacturing overhead per unit
Fixed MOH in ending inventory
Fixed manufacturing overhead released from beg. Inv.
Net difference

Net income - variable costing

Fixed MOH in ending inventory
Fixed MOH from beginning inventory
net income - absorption

Lean Production

Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Unit costs

Sales
Variable cost of goods sold
Variable selling and administrative
Contribution margin
Fixed manufacturing overhead
Fixed selling and administrative
Net income - variable costing
fixed overhead in ending inventory (17,500-15,000)P18
fixed overhead released from beginning inventory
Net income - absorption
 PROBLEM 7- 25
YEAR 1 YEAR 2
800,000.00 640,000.00

100,000.00 80,000.00
50,000.00 40,000.00
150,000.00 120,000.00
650,000.00 520,000.00

480,000.00 480,000.00
140,000.00 140,000.00
620,000.00 620,000.00
30,000.00 (100,000.00)

480,000.00 480,000.00
50,000.00 60,000.00
9.60 8.00
2.00 2.00
11.60 10.00
580,000.00 400,000.00

- 20,000.00
9.60 8.00
 - 160,000.00

30,000.00 (100,000.00)
- 160,000.00
- -
30,000.00 60,000.00

Problem 7-22

Absorption Variable
7.00 7.00
10.00 10.00
5.00 5.00
18.00 -
40.00 22.00

July August
900,000.00 1,200,000.00
330,000.00 440,000.00
45,000.00 60,000.00
525,000.00 700,000.00
315,000.00 315,000.00
245,000.00 245,000.00
(35,000.00) 140,000.00
45,000.00
- (45,000.00)
10,000.00 95,000.00
PROBLEM 7- 25
YEAR 3
800,000.00

100,000.00
50,000.00
150,000.00
650,000.00

480,000.00
140,000.00
620,000.00
30,000.00

480,000.00
40,000.00
12.00
2.00
14.00
620,000.00

10,000.00
12.00
 120,000.00
160,000.00
(40,000.00)

30,000.00
120,000.00
(160,000.00)
(10,000.00)

Problem 7-22