Selling price

300 per unit

Material
Labor
Variable

$
$
$

120 per unit

50 per unit
30 per unit

Fixed FOH
Variable selling expenses

$
$

1,300,000
20 per unit

Fixed selling expenses

Units produced
Units sold

Year 1
30,000
30,000

700,000
Year 2
35,000
34,000

Year 3
40,000
38,000

Year # 1
Absorption Costing
Sale
Less; Cost of Good Sold
Units Produced
Fixed FOH

30,000 $

300

30,000 $

200

6,000,000

$
$

1,300,000
7,300,000

600,000

$
$

700,000
1,300,000

$
$

6,000,000
600,000

6,600,000

Fixed FOH

1,300,000

Fixed Selling Exp

$
$

700,000
2,000,000

COGM
Gross Profit
Less;Selling Expense
Variable Selling Exp

30,000 $

20

Fixed Selling Exp

Total Selling Expenses
Net Income
Variable Costing
Sale
Less; Cost of Good Sold
Units Produced
Variable Selling Exp

30,000 $

300

30,000 $
30,000 $

200
20

Contribution Margin
Gross Profit
Less;Selling & FOH Expense

Total Selling & FOH Expenses

Net Income

Year # 3
Absorption Costing

38,000 $

Sale

300

Less; Cost of Good Sold

Opeining Inventory
Units Produced
Fixed FOH
Cost of Goods Available
Less; Ending Goods
COGS

1,000 237.142857143 237142.85714

40,000 $
200 $
8,000,000
$ 1,300,000
$ 9,537,143
3,000 238.428571429
(715,285.71)
$ 8,821,857

Gross Profit
Less;Selling Expense
Variable Selling Exp

38,000 $

20

Fixed Selling Exp

Total Selling Expenses

760,000

$
$

700,000
1,460,000

200,000
8,000,000

Net Income
Variable Costing
Sale

38,000 $

300

Less; Cost of Good Sold

Opeining Inventory
Units Produced

1,000
40,000 $

200 $
200 $
$
205
$

Cost of Goods Available

Less; Ending Goods

3000

Cost of Good used

Variable Selling Exp
Contribution Margin

38,000 $

20

8,200,000
(615,000)

7,585,000

760,000

1,300,000

$
$

700,000
2,000,000

Gross Profit
Less;Selling & FOH Expense
Fixed FOH
Fixed Selling Exp
Total Selling & FOH Expenses
Net Income

Period 2
V & Absorb Diff
Closing Inventory

Variable
Absorb[piton
Difference
$
(200,000)
(237,142.86) $
37,142.86

Net Income

757,142.86

720,000.00

37,142.86

Variable
Absorb[piton
$
200,000
237,142.86 $
(615,000.00)
(715,285.71) $

(37,142.86)
100,285.71

Period 3
V & Absorb Diff
Opening Inventory
Ending Inventory
Period 4
V & Absorb Diff
Opening Inventory
Net Income

Variable
Absorb[piton
Difference
$
715,286
615,000.00 $
100,285.71
1,825,000.00
1,724,714.29 $
100,285.71

Prepaird by:ikramullah ikram

Date : 17/6/2016

Year 4
45,000
48,000

Year # 2
Absorption Costing
$

9,000,000

Sale

34,000 $

300

35,000 $

200

Less cost of goods sold:

Units Produced
Fixed FOH

$ (7,300,000)
$ 1,700,000

Cost of goods available for sale

Less; Ending Goods

1,000 237.14285714

Gross profit

Less;Selling Expense

$ (1,300,000)
$
400,000

Variable Selling Exp

34,000 $

20

Fixed Selling Exp

Total Selling Expenses
Net Income

9,000,000
Variable Costing

$ (6,600,000)
$ 2,400,000

Sale
Less; Cost of Good Sold

34,000 $

300

Units Produced

35,000 $

200

Cost of Goods Available

Less; Ending Goods

1000

200

34,000 $

20

Cost of Good used

Variable Selling Exp

$ (2,000,000)
$
400,000

Contribution Margin
Gross Profit
Less;Selling & FOH Expense
Fixed FOH
Fixed Selling Exp

11,400,000

Total Selling & FOH Expenses

Net Income

Year # 3
Absorption Costing
Sale

48,000 $

300

Less; Cost of Good Sold

Opeining Inventory

$ (8,821,857)
$ 2,578,143

Units Produced

3,000 238.42857143
45,000 $
200

Fixed FOH
Cost of Goods Available
COGS
Gross Profit

$ (1,460,000)
$ 1,118,143

Less;Selling Expense
Variable Selling Exp

48,000 $

20

Fixed Selling Exp

Total Selling Expenses
$

11,400,000

Net Income
Variable Costing
Sale

48,000 $

300

3,000
45,000 $

205
200

48,000 $

20

Less; Cost of Good Sold

Opeining Inventory
Units Produced
Cost of Goods Available

$ (8,345,000)
$ 3,055,000

Variable Selling Exp

Contribution Margin
Gross Profit
Less;Selling & FOH Expense
Fixed FOH
Fixed Selling Exp

$ (2,000,000)
$ 1,055,000

Total Selling & FOH Expenses

Net Income

Difference
$

63,142.86

h ikram
6

ting

7,000,000

$
$

1,300,000
8,300,000

10,200,000

$
$

(8,062,857)
2,137,143

$
$

(1,380,000)
757,143

10,200,000

$
$

(7,480,000)
2,720,000

(237,142.86)

8,062,857

680,000

$
$

700,000
1,380,000

ng

7,000,000
(200,000)

$
$

6,800,000
(680,000)

1,300,000

700,000

2,000,000

$
$

(2,000,000)
720,000

14,400,000

ting

715285.71429
$

9,000,000

$ 1,300,000
$ 11,015,286
$ 11,015,286

960,000

$
$

700,000
1,660,000

$ (11,015,286)
$
3,384,714

$
$

(1,660,000)
1,724,714

14,400,000

ng

615,000

9,000,000

9,615,000

960,000

$ (10,575,000)
$
3,825,000
$

1,300,000

$
$

700,000
2,000,000

$
$

(2,000,000)
1,825,000