Assignment # 4

Chapter 6: Variable Costing and Segment Reporting

(a) Prepare an income statement using full costing.

Vice Versa Ventures

Income Statement for the
Year Ended 20XX

$ $

Sales (17000*$35) 595,000

Opening Inventory 0

Add: Cost of Goods Manufactured (20,000*($5+5+2+8)) 400,000

Less: Ending Inventory (60,000)

Cost of Goods Sold (340,000)

Gross Profit 255,000

Less Other Expenses

Selling and Administrative Expense (80,000+(17,000*3)) (131,000)

Net Operating Income 124,000

(b) Prepare an income statement using variable costing.

Vice Versa Ventures

Income Statement for the
Year Ended 20XX

$ $

Sales (17000*$35) 595,000

Opening Inventory 0

Add: Variable Cost of Goods Manufactured 400,000

(20,000*($5+5+2))
Less: Ending Inventory (3000*(5+5+2)) (36,000)

Variable Cost of Goods Sold 204,000

Add: Variable Selling and Administrative Expense 51,000

(17000*3)
Total Variable Cost (255,000)

Contribution Margin 340,000

Fixed Expenses:

Fixed Manufacturing Overheads 160,000

Fixed Selling and Administrative Expense 80,000

Total Fixed Expenses (240,000)

Net Operating Income 100,000