Need help with my Accounting question – I’m studying for my class.
Q1. Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the internal decision-making and compare with the traditional income statement prepared by absorption costing that is used for the external reporting. Prepare the two income statements assuming the following (2.5 marks)
- There is no inventory.
- There is beginning inventory.
- There is end of period inventory
- Explain and comment on the reasons for differences in the results
Q2. Define the master budget and use your own figures to prepare the following quarter budgets:
- Sales budget
- Production budget with ending inventory.
- Raw material budget with ending inventory.
- Direct labor budget
- Manufacturing overhead budget.