**I have prepared the profit statement for each month and each method (absorption and variable costing)
!!Now i need to reconcile the profit calculated using absorption costing to that using variable costing. How do you do that? Below i attach the results from each method that i got.
| Profit statement (absorption Costing) | Profit Statement (Variable Costing) | ||||||
| February | |||||||
| February | Sales (11500@22) | 253000 | |||||
| Sales (11500 units@22) | 253000 | Less variable cost of goods sold | |||||
| Less cost of goods sold | Beginning inventory (0 units) | 0 | |||||
| Beginning inventory | 0 | Add varable COG Manufactured (12500 units) | 55300 | 29000+19000+7300 | |||
| Add COG manufactured (12500 Units) | 83900 | 29000+19000+7300+28600 | Variale COG available fo sales (12500 units) | 55300 | |||
| COG available for sales(12500 units) | 83900 | Less closing inventory (1000 unitsX4,424) | 4424 | -50876 | |||
| Less closing inventory (1000 unitsX6,712 | -6712 | -77188 | (83900/12500)*1000 | Variable manufacturing margin | 202124 | ||
| Gross Profit | 175812 | Less variable selling and administrative expenses | -36225 | ||||
| Less Selling and administration expenses | Contribution Margin | 165899 | |||||
| Fixed selling and administration expenses | -8275 | Less fixed expenses | |||||
| Variable selling and administration expenses | -36225 | -44500 | ((57100-44500)/4000*11500 | Fixed selling and administration expenses | 8275 | ||
| Net profit for February | 131312 | Fixed production overheads | 28600 | -36875 | |||
| Net profit for February | 129024 | ||||||
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