During the most recent year Osterman Company had the followi

During the most recent year, Osterman Company had the following data:

1. Calculate the cost of goods sold under variable costing.

The cost of goods sold under the variable costing method is .

2. Prepare an income statement using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Osterman Company

Variable-Costing Income Statement

For the Most Recent Year

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1. Calculate the cost of goods sold under absorption costing.

The cost of goods sold under the absorption costing method is .

2. Prepare an income statement using absorption costing. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement.

Osterman Company

Absorption-Costing Income Statement

For the Most Recent Year

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Units in beginning inventory	---
Units produced	11,350
Units sold ($50 per unit)	9,400
Variable costs per unit:
Direct materials	$10
Direct labor	$5
Variable overhead	$3
Fixed costs:
Fixed overhead per unit produced	$4
Fixed selling and administrative expenses	$138,500

Solution

Computation of Cost of Goods Sold for 9400 Unit Using Variable costing Using Absorption costing Cost/unit toal Cost Cost/unit toal Cost Variable cost for 9400 unit Direct Material $10 $94,000 $10 $94,000 Direct labour $5 $47,000 $5 $47,000 Variable Overhead $3 $28,200 $3 $28,200 Fixed Cost Fixed ovehead - $4 $37,600 Total cost of goods sold $169,200 $206,800 Income statement Using Variable costing Using Absorption costing toal Cost Amount Sales ( 9400 unit@$50) 470000 470000 Less: Cost of goods sold $169,200 $206,800 Contribution marging $300,800 $263,200 Less: Fixed Overhead $37,600 $0 Gross Margin $263,200 $263,200 Less: Selling & adminstration Expenses $138,500 $138,500 Operating Income $124,700 $124,700