139.On October 31, the end of the first month of operations, Morristown & Co. prepared the following incomestatement based on absorption costing:
Morristown & Co.
Absorption Costing Income Statement
For Month Ended October 31, 20-
Sales (2,600 units)
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$117,000
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Cost of goods sold:
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Cost of goods manufactured
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$85,500
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Less ending inventory (400 units)
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11,400
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Cost of goods sold
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74,100
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Gross profit
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$ 42,900
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Selling and administrative expenses
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21,500
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Income from operations
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$ 21,400
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If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600,prepare an income statement using variable costing.
140.Fixed costs are $10 per unit and variable costs are $25 per unit. Production was 13,000 units, while sales were12,000 units. Determine (a) whether variable costing income from operations is less than or greater than absorptioncosting income from operations, and (b) the difference in variable costing and absorption costing income fromoperations.
141.Fixed costs are $50 per unit and variable costs are $125 per unit. Production was 130,000 units, while sales were125,000 units. Determine (a) whether variable costing income from operations is less than or greater thanabsorption costing income from operations, and (b) the difference in variable costing and absorption costing incomefrom operations.
142.At EOM Inc., the beginning inventory is 20,000 units. All of the units manufactured during the period and 16,000units of the beginning inventory were sold. The beginning inventory fixed costs are $50 per unit, and variable costsare $300 per unit. Determine (a) whether variable costing income from operations is less than or greater thanabsorption costing income from operations, and (b) the difference in variable costing and absorption income fromoperations.