GeorgiaShacks

IncomeStatement(Absorption)
FortheYearEndedDecember31,2013
Sales
Cost of goods sold
variable
Fixed overhead
[($1,500,000 2,000)
1,500]
Gross profit
Variable selling &
administrative
Fixed selling &
administrative
Net income

$1,950,00
0
1,125,000

$
270,000
190,000

$
3,750,0
00

(3,075,00
0)
$
675,000

(460,000)
$
215,000

b.)
Absorption
$215 000
Ending Inventory(500x750) (375 000)
Variable Costing
(160 000)
c.) It is not only ethical, but it is also required
for the statements to be in conformity with
generally accepted accounting principles.

GeorgiaShacks
IncomeStatement(Variable)
FortheYearEndedDecember31,2014
Sales (2,200 $2,500)

5,500,000
(2,860,000)

Variable cost of goods sold (2,200

$1,300)
Product contribution margin

Variable selling & administrative

($180 2,200)
Contribution margin

2,640,000

Fixed overhead
$1,500,0
00
Fixed selling & administrative
Net income

(396,000)
$

2,244,000

(1,690,000)

190,000

554,000

GeorgiaShacks
IncomeStatement(Absorption)
FortheYearEndedDecember31,2014

Sales

Cost of goods soldvariable

$2,860,00
0

Fixed overhead [($1,500,000

2,000) 2,200]

$
5,500,000

(4,510,000)
1,650,000

Gross profit

Variable selling &

administrative
Fixed selling &
administrative
Net income

$
396,000

$
990,000

(586,000)
190,000

$
404,000

Variable Costing
$554 000
Beginning Inventory(500x750)
(375 000)
Ending Inventory(300x750)
225
000
Absorption Costing
$404 000