Question

Crystal Corporation produces a single product. The company's variable costing income statement for the month of May appears below: Crystal Corporation Income Statement For the month ended May 31 Sales ($22 per unit) $3,850,000 Variable expenses: Variable cost of goods sold 2,450,000 Variable selling expense 350,000 Total variable expenses 2,800,000 Contribution margin 1,050,000 Fixed expenses: Fixed manufacturing overhead 650,000 Fixed selling and administrative 175,000 Total fixed expenses 825,000 Net operating income $225,000 The company produced 130,000 units in May and the beginning inventory consisted of 90,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. Under absorption costing, for May the company would report a

Answer 1

Answer:

Sales   3,850,000.00

Variable   3,325,000.00 (175,000 x 19)

Gross Profit   525,000.00

S&A   525,000.00

Net Income   -  

Explanation:

Under aborption cost, the company will include the fixed cost as part of the unit cost.

3850000 / 22 = 175,000 sold units

Variable cost 2,450,000 / 175,000 = 14

650,000 fixed will be distribute among the 130,000 units produced

650,000/130,000 = 5

Absorption cost

14 + 5 = 19

Selling and administrative will be placed as expenses.