Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 56

Variable costing income statement
On July 31, 2016, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200.
b. Reconcile the absorption costing income from operations of $1,656,000 with the variable costing income from operations determined in (a).