The cost accountant for the Friendly Manufacturing Company has provided you with the following information for the month of July:
$$\begin{array} { l c c }
& & \text { Total Fixed } \
&\text { Variable costs Per unit } & \text { Costs } \
\text { Direct labor } & 27.50 \
\text { Direct materials } &84.75 & \
\text { Manufacturing overhead } & 14.25 & \$ 120,000 \
\text { Marketing costs } &5.30 & 50,000\
\text { Administrative costs } &2.90 & 75,000 \
\text { Selling price } & 210.00
\end{array}$$
Required:
Assuming the company produced and sold 5,000 units, and there were no units in inventory on July 1, prepare the following income statements for the month of July:
(a) Contribution margin income statement.
(b) Gross margin income statement.

Question

The cost accountant for the Friendly Manufacturing Company has provided you with the following information for the month of July:
 $$\begin{array} { l c c } 
& & \text { Total Fixed } \
&\text { Variable costs Per unit } & \text { Costs } \
\text { Direct labor } & 27.50  \
\text { Direct materials } &84.75 & \
\text { Manufacturing overhead } &  14.25 & \$ 120,000  \
\text { Marketing costs } &5.30 & 50,000\
\text { Administrative costs } &2.90 & 75,000  \
\text { Selling price } & 210.00
\end{array}$$ 
Required:
Assuming the company produced and sold 5,000 units, and there were no units in inventory on July 1, prepare the following income statements for the month of July:
(a) Contribution margin income statement.
(b) Gross margin income statement.

Quizplus · Accepted Answer

The Answer of The cost accountant for the Friendly Manufacturing Company has provided you with the following information for the month of July:
 $$\begin{array} { l c c } 
& & \text { Total Fixed } \
&\text { Variable costs Per unit } & \text { Costs } \
\text { Direct labor } & 27.50  \
\text { Direct materials } &84.75 & \
\text { Manufacturing overhead } &  14.25 & \$ 120,000  \
\text { Marketing costs } &5.30 & 50,000\
\text { Administrative costs } &2.90 & 75,000  \
\text { Selling price } & 210.00
\end{array}$$ 
Required:
Assuming the company produced and sold 5,000 units, and there were no units in inventory on July 1, prepare the following income statements for the month of July:
(a) Contribution margin income statement.
(b) Gross margin income statement.

The Cost Accountant for the Friendly Manufacturing Company Has Provided