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Unformatted text preview: Contribution margin 392,000 Fixed costs: Fixed manufacturing costs 240,000 Fixed selling and administrative expenses 160,000 400,000 Income from operations 8,000 4. I would prefer to take the absorption costing income statement to the bank to negotiate for a bank loan because the variable costing income statement shows a negative balance whereas, the absorption statement shows a profit for the company. Reconciliation of Net Operating Income Net Income under Contribution Format ($ 8,000) Add Fixed Manufacturing Overhead deferred in Inventory ($60*800) $48,000 Absorption Cost Net Operating Income $40,000 5. Variable costing net operating income (loss) $ (8,000) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing (800 units $60 per unit) 48,000 Absorption costing net operating income $40,000...
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- Spring '11
- Managerial Accounting