April May

Beginning inventory - 150

Production 500 400
Sales 350 520
Ending inventory 150 30

Variable costing April

Revenues 8,400,000
Less Variable costs
Variable cost of good sold
Beginning inventory -
Plus Variable manufacturing costs 5,000,000
Cost of goods availble for sale 5,000,000
Deduct ending inventory 1,500,000
Variable cost of good sold 3,500,000
Variable non-manufacturing costs 1,050,000
Contribution margin 3,850,000
Less Fixed costs
Fixed manufacturing costs 2,000,000
Fixed non-manufacturing costs 600,000
Operating income 1,250,000

2017
Operating income variable costing 1,250,000
Operating income absoption costing 1,850,000
Diff 600,000
= FMC diff 1,190,000 $135*8,000-$135*6,000
 Selling price $ 24,000
VCM per unit $ 10,000
VNMC per unit $ 3,000
FMC $ 2,000,000 $ 4,000
FNMC $ 600,000

May Absorption costing April May

12,480,000 Revenues 8,400,000 12,480,000
Less cost of good sold
Beginning inventory - 2,100,000
1,500,000 Plus Variable manufacturing costs 5,000,000 4,000,000
4,000,000 Allocated fixed manufacturing costs 2,000,000 1,600,000
5,500,000 Cost of goods availble for sale 7,000,000 7,700,000
300,000 Deduct ending inventory 2,100,000 420,000
5,200,000 Cost of good sold 4,900,000 7,280,000
1,560,000 Adjustments (400,000)
5,720,000 Gross margin 3,500,000 4,800,000
Less Non-manufacturing costs
2,000,000 Variable non-manufacturing costs 1,050,000 1,560,000
600,000 Fixed non-manufacturing costs 600,000 600,000
3,120,000 Operating income 1,850,000 2,640,000

2018
3,120,000
2,640,000
(480,000)
8,000-$135*6,000 (202,500) $135*5,000-$135*6,500
 FMC per unit

35*5,000-$135*6,500
 Jan feb
Beginning inventory - 100
Production 1,400 1375
Sales 1,300 1375
Ending inventory 100 100

Variable costing Jan

Sales 4,550,000
Less Variable costs
Variable cost of good sold
Beginning inventory -
Plus Variable manufacturing costs 1,330,000
Cost of goods availble for sale 1,330,000
Deduct ending inventory 95,000
Variable cost of good sold 1,235,000
Variable non-manufacturing costs 942,500
Contribution margin 2,372,500
Less Fixed costs
Fixed manufacturing costs 490,000
Fixed non-manufacturing costs 120,000
Operating income 1,762,500

Operating income variable costing 1,762,500

Operating income absoption costing 1,797,500
Diff 35,000
= FMC diff (320,000) 8,000*$135-6,000*$135
 march
100 Selling price $ 3,500
1430 VCM per unit $ 950
1455 VNMC per unit $ 725
75 FMC $ 490,000
FNMC $ 120,000

Feb Mar Absorption costing Jan

4,812,500 5,092,500 Revenues 4,550,000
Less cost of good sold
Beginning inventory -
95,000 95,000 Plus Variable manufacturing costs 1,330,000
1,306,250 1,358,500 Allocated fixed manufacturing costs 490,000
1,401,250 1,453,500 Cost of goods availble for sale 1,820,000
95,000 71,250 Deduct ending inventory 130,000
1,306,250 1,382,250 Cost of good sold 1,690,000
996,875 1,054,875
2,303,125 2,437,125 Gross margin 2,860,000
Less Non-manufacturing costs
490,000 490,000 Variable non-manufacturing costs 942,500
120,000 120,000 Fixed non-manufacturing costs 120,000
1,899,375 2,045,375 Operating income 1,797,500

*$135-6,000*$135
$ 350 $ 356.36

Feb Mar
4,812,500 5,092,500

130,000 $ 130,000
$ 1,306,250 $ 1,358,500
$ 481,250 $ 500,500
1,917,500 $ 1,989,000
$ 130,000 $ 97,500
1,787,500 $ 1,891,500

3,025,000 3,201,000

$ 996,875 $ 1,036,750
$ 120,000 $ 120,000
1,908,125 2,044,250
9.21 9.23 9.25
 Jan
Beginning inventory 100,000
Production 350,000
Sales 400,000
Ending inventory 50,000

Variable costing Jan

Sales 4,550,000
Less Variable costs
Variable cost of good sold
Beginning inventory 100,000
Plus Variable manufacturing costs 1,330,000
Cost of goods availble for sale 1,430,000
Deduct ending inventory 95,000
Variable cost of good sold 1,335,000
Variable non-manufacturing costs 942,500
Contribution margin 2,272,500
Less Fixed costs
Fixed manufacturing costs 490,000
Fixed non-manufacturing costs 120,000
Operating income 1,662,500

Operating income variable costing 1,662,500

Operating income absoption costing 841,790,000
Diff 840,127,500
= FMC diff (320,000) 8,000*$135-6,000*$135
 Selling price $ 3,500
VCM per unit $ 950
VNMC per unit $ 725
FMC $ 490,000
FNMC $ 120,000

Feb Mar Absorption costing Jan

4,812,500 5,092,500 Revenues 1,400,000,000
Less cost of good sold
Beginning inventory 100,000
95,000 - Plus Variable manufacturing costs 332,500,000
1,306,250 - Allocated fixed manufacturing costs 490,000
1,401,250 - Cost of goods availble for sale 333,090,000
- - Deduct ending inventory 65,000,000
1,401,250 - Cost of good sold 268,090,000
- -
1,401,250 - Gross margin 1,131,910,000
Less Non-manufacturing costs
490,000 490,000 Variable non-manufacturing costs 290,000,000
120,000 120,000 Fixed non-manufacturing costs 120,000
2,801,250 4,482,500 Operating income 841,790,000

*$135-6,000*$135
$ 350 #DIV/0!

Feb Mar
4,812,500 5,092,500

65,000,000 $ 130,000
$ - $ -
$ - $ -
65,000,000 $ 130,000
$ 130,000 $ 97,500
64,870,000 $ 32,500

(60,057,500) 5,060,000

$ - $ -
$ 120,000 $ 120,000
(60,177,500) 4,940,000