Answer Happy

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January: Production Sales ($18 per unit) Inventory, January 31 Manufacturing costs: Variable Fixed Total Selling and administrative expenses: Variable Fixed Total Required: Units 50,000 (42,000) 8,000 $575,000 80,000 $655,000 $35,000 10,500 $ 45,500

a. Prepare an income statement using absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. 1 Sales 2 Cost of goods sold: 5 4 5 Cost of goods manufactured Ending inventory Total cost of goods sold Townsend Co. Absorption Costing Income Statement. For the Month Ended January 31 Gross profit 7 Selling and administrative expenses 8 Operating income $655,000.00 104,800.00 $756,000.00 550,200.00 $205,800.00 45,500.00 $160,300.00

1 Sales 2 3 Variable cost of goods sold: Variable cost of goods manufactured Ending inventory Total variable cost of goods sold 6 Manufacturing margin 7 Variable selling and administrative expenses 8 Contribution margin 9 (Label) 10 Fixed manufacturing costs 4 S 11 12 Townsend Co. Variable Costing Income Statement (Label) Fixed selling and administrative expenses 13 Operating income $575,000.00 92,000.00 $80,000.00 10,500.00 $756,000.00 483,000.00 $273,000.00 35,000.00 $238,000.00 90,500.00 $147,500.00