Estimated Income Statements, using Absorption and Variable CostingPrior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:Sales (27,200 x $96)$2,611,200 Manufacturing costs (27,200 units): Direct materials1,572,160 Direct labor372,640 Variable factory overhead174,080 Fixed factory overhead206,720 Fixed selling and administrative expenses56,200 Variable selling and administrative expenses68,000 The company is evaluating a proposal to manufacture 30,400 units instead of 27,200 units, thus creating an ending inventory of 3,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 27,200 and 30,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. a. 2. Prepare an estimated income statement, comparing operating results if 27,200 and 30,400 units are manufactured in the variable costing format. If an amount box does notrequire an entry leave it blank.SalesVariable cost of goods sold:Variable cost of goods manufacturedInventory, October 31✓Total variable cost of goods sold✓Manufacturing marginVariable selling and administrative expensesContribution margin -VFixed costs:Fixed factory overheadFixed selling and administrative expensesTotal fixed costsMarshall Inc.Variable Costing Income StatementFor the Month Ending October 31Operating income✓✓27,200 Units Manufactured492,320 X$$$30,400 Units Manufactured492,320 X$ a. 1. Prepare an estimated income statement, comparing operating results if 27,200 and 30,400 units are manufactured in the absorption costing format. If an amount box does notrequire an entry leave it blank.SalesCost of goods sold:Cost of goods manufacturedInventory, October 31Total cost of goods soldMarshall Inc.Absorption Costing Income StatementFor the Month Ending October 31Gross profitSelling and administrative expensesOperating income27,200 Units Manufactured2,325,600 X285,600 X161,400 X30,400 Units Manufactured2,325,600 X285,600 X161,400 X

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Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 23BEA: Absorption-Costing Income Statement Refer to the data for Osterman Company above. Required: 1....

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Estimated Income Statements, using Absorption and Variable Costing

Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:

Sales (27,200 x $96)	$2,611,200
Manufacturing costs (27,200 units):
Direct materials	1,572,160
Direct labor	372,640
Variable factory overhead	174,080
Fixed factory overhead	206,720
Fixed selling and administrative expenses	56,200
Variable selling and administrative expenses	68,000

The company is evaluating a proposal to manufacture 30,400 units instead of 27,200 units, thus creating an ending inventory of 3,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

a. 1. Prepare an estimated income statement, comparing operating results if 27,200 and 30,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.