Whitney Company Has Just Completed Its First Year of Operations

question 127

Essay

Whitney Company has just completed its first year of operations.The company's accountant has prepared an absorption costing income statement for the year as seen below:
$\begin{array} { l } \text {Sales \( (35,000 \) units at \( \$ 25) \) }&&\$875,000 \\ \text {Beginning Inventory}&0 \\ \text {Cost of Goods Mantifactured \( (35,000 \times \$ 12)+\$ 160,000= \) }&580,000 \\ \text {Cost of Goods Available }&580,000 \\ \text {Ending Inventory }& 0\ \text { Cost of Goods Sold}&&580,000 \\ \text {Gross Margin }&&295,000 \\ \text {Selling and Administrative Expenses }&&280,000 \\ \text {Net Income }&&\$15,000 \\\end{array}$

The variable production costs per unit are determined as follows:
$\begin{array} { l } \text {Direct materials }&\$5 \\ \text {Direct labor }&6 \\ \text { Variable production}&1 \\ \text {Total variable production costs }&\$12 \\\end{array}$

The company's fixed production costs are $160,000 per year.The company's selling and administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit in variable expenses.
Required:
Prepare the company's income statement in the contribution format.

---

Definitions:

Sine Waves

Smooth, repetitive oscillations that are mathematically described by the sine function, often representing periodic phenomena in physics and engineering.

Decibels

A unit of measurement for the intensity of sound, representing a ratio between two quantities on a logarithmic scale.

Hertz

In the International System of Units (SI), frequency is measured in a unit described as one cycle occurring every second.

Hertz

The unit of frequency in the International System of Units (SI), defined as one cycle per second.