Q13SE Using absorption and variable co... [FREE SOLUTION]

Chapter 21: Q13SE (page 1170)

Using absorption and variable costing
Meyer Company reports the following information for March:
Net Sales Revenue $ 45,300
Variable Cost of Goods Sold 12,500
Fixed Cost of Goods Sold 11,800
Variable Selling and Administrative Costs 14,000
Fixed Selling and Administrative Costs 5,400
Requirements:
Calculate the gross profit and operating income for March using absorption costing.
Calculate the contribution margin and operating income for March using variable costing.

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Answer

Particulars	Amount
Net sales revenue	$45,300
Less: Cost of goods sold
Variable cost of goods sold	$12,500
Fixed cost of goods sold	$11,800
Gross profit	$21,000
Less: Selling and administrative cost
Variable selling and administrative cost	$14,000
Fixed selling and administrative cost	$5,400
Operating Income	$1,600

Particulars	Amount
Net sales revenue	$45,300
Less: Variable costs
Variable cost of goods sold	$12,500
Variable selling and administrative cost	$14,000
Contribution margin	$18,800
Less: Fixed costs
Fixed costs of goods sold	$11,800
Fixed selling and administrative cost	$5,400
Operating Income	$1,600

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