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Vice Versa Ventures

The document provides two income statements for Vice Versa Ventures for the year ended 20XX - one using full costing and one using variable costing. The full costing statement shows a net operating income of $124,000 while the variable costing statement shows a net operating income of $100,000 due to the treatment of fixed costs as period costs rather than product costs.

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Aitesam Ullah
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51 views2 pages

Vice Versa Ventures

The document provides two income statements for Vice Versa Ventures for the year ended 20XX - one using full costing and one using variable costing. The full costing statement shows a net operating income of $124,000 while the variable costing statement shows a net operating income of $100,000 due to the treatment of fixed costs as period costs rather than product costs.

Uploaded by

Aitesam Ullah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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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

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