The Data Given Below Pertains to the Operations of the Newton

question 30

Essay

The data given below pertains to the operations of the Newton Products Corporation for the year ended December 31, 2013 $\begin{array} { l r } \text { Sales: } & 3,400 \text { units at } \$ 55 \text { a unit } \\\text { Variable manufacturing costs: } & 3,200 \text { units at } \$ 25 \text { a unit } \\\text { Variable selling and admin. expenses: } & \$ 5 \text { a unit } \\\text { Fixed manufacturing costs: } & \$ 24,000 \\\text { Fixed selling and admin. expenses: } & \$ 16,000 \\\text { Finished goods inventory, Jan. 1, 2013: } & 500 \text { units } \\\text { Finished goods inventory, December 31, } & 600 \text { units }\end{array}$
-Based on the information given prepare an income statement for the year using the direct costing approach. Assume that the beginning finished goods inventory had a cost of $25 per unit.

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Definitions:

Income Tax Expense

The amount of money a company owes in taxes based on its taxable income for a given fiscal period.

Cost Method

An accounting method used for investments, where the investment is recorded at cost and earnings from the investment are recognized only when dividends are received.

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.

Common Shares

A type of equity investment representing ownership in a corporation, with rights to dividends and voting at shareholder meetings.