00:01
Hello, in this question, we will calculate the net income through variable costing and also through absorption costing.
00:10
So for richard corporation, we will first make the statement of income by variable costing method.
00:28
So first, we will write sales, which is $700 ,000 and variable cost of goods sold will be less from it.
00:53
That is material cost, direct labor cost, variable overhead.
01:11
So it will be 7875010500052500.
01:22
So the total will be 236250.
01:29
Therefore, the contribution margin will be 463750.
01:44
Then we will list the fixed cost from it and it is fixed overhead, fixed marketing and administrative expense, which is 150000 and 18000.
02:25
So the total will be 168000.
02:30
Thereby net income by variable costing, we have 295750.
02:41
Now let's make the statement of income by absorption costing.
02:54
So here in absorption costing, we take all the costs together like variable cost and fixed cost together...