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Unformatted text preview: ABC Company sells 10,000 widgets. The company has no beginning or ending inventory. Using the absorption approach (GAAP) the net income of the company is as follows: Sales (10,000 @ $20) $200,000 Cost of goods sold (10,000 @ $12) 120,000 Gross profit $ 80,000 Expenses 20,000 Net income $ 60,000 Using the contribution margin approach the net income of the company is as follows: Sales (10,000 @ $20) $200,000 Variable cost of goods sold (10,000 @ $8) 80,000 Contribution margin $120,000 Fixed expenses 60,000 Net income $ 60,000...
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This note was uploaded on 10/15/2011 for the course ACCT 201 taught by Professor Anothony during the Spring '10 term at Trident Technical College.
- Spring '10