Whitney Company Has Just Completed Its First Year of Operations

Essay

Whitney Company has just completed its first year of operations.The company's accountant has prepared an absorption costing income statement for the year as seen below:
$\begin{array} { l } \text {Sales \( (35,000 \) units at \( \$ 25) \) }&&\$875,000 \\ \text {Beginning Inventory}&0 \\ \text {Cost of Goods Mantifactured \( (35,000 \times \$ 12)+\$ 160,000= \) }&580,000 \\ \text {Cost of Goods Available }&580,000 \\ \text {Ending Inventory }& 0\ \text { Cost of Goods Sold}&&580,000 \\ \text {Gross Margin }&&295,000 \\ \text {Selling and Administrative Expenses }&&280,000 \\ \text {Net Income }&&\$15,000 \\\end{array}$

The variable production costs per unit are determined as follows:
$\begin{array} { l } \text {Direct materials }&\$5 \\ \text {Direct labor }&6 \\ \text { Variable production}&1 \\ \text {Total variable production costs }&\$12 \\\end{array}$

The company's fixed production costs are $160,000 per year.The company's selling and administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit in variable expenses.
Required:
Prepare the company's income statement in the contribution format.