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Exercise 2-54 (Static) Gross Margin and Contribution Margin Income Statements (LO 2-7) The following data are from the accounting records of Niles Castings for year 2. Units produced and sold 85,000 Total revenues and costs Sales revenue $ 264,000 Direct materials costs 68,000 Direct labor costs 34,000 Variable manufacturing overhead 17,000 Fixed manufacturing overhead 44,000 Variable marketing and administrative costs 13,600 Fixed marketing and administrative costs 32,000 Required: a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement.

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Answer from: ashleyrobles2676

a. Prepare a gross margin income statement.

Sales revenue $264,000

Less Cost of Goods Sold

Cost of Goods Manufactured ($163,000)

Gross Profit $101,000

Less Expenses :

Variable marketing and administrative costs ($13,600)

Fixed marketing and administrative costs ($32,000)

Net Income/ (Loss) $55,400

b. Prepare a contribution margin income statement.

Sales revenue $264,000

Less Cost of Goods Sold

Cost of Goods Manufactured ($119,000)

Contribution $145,000

Less Expenses :

Fixed manufacturing overhead ($44,000)

Variable marketing and administrative costs ($13,600)

Fixed marketing and administrative costs ($32,000)

Net Income/ (Loss) $55,400

Explanation:

Manufacturing Costs Schedule - Absorption Costing

Direct materials $68,000

Direct labor $34,000

Variable manufacturing overhead $17,000

Fixed manufacturing overhead $44,000

Total Manufacturing Costs $163,000

This is the costs of sales for gross margin income statement.

Manufacturing Costs Schedule - Variable Costing

Direct materials $68,000

Direct labor $34,000

Variable manufacturing overhead $17,000

Total Manufacturing Costs $119,000

This is the cost of sales for contribution margin income statement.

Answer from: Quest

The correct answer is "b) net income overstated, assets unaffected, liabilities understated, and owner's equity overstated."

Answer from: Quest

answer decisions made by individual households and firms;

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Exercise 2-54 (Static) Gross Margin and Contribution Margin Income Statements (LO 2-7) The following...

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