Costing formulas

Question 1

Variable costing income statement template

Answer 1

Revenues

Variable costs:
Beginning inventory
Variable manufacturing costs
Cost of goods available for sale
Deduct ending inventory
Variable cost of goods sold
Variable operating costs
Total variable costs

Contribution margin

Fixed costs:
Fixed manufacturing costs
Fixed operating costs
Total fixed costs

Operating income

Question 2

Absorption costing income statement template

Answer 2

Revenues

Cost of goods sold:
Beginning inventory
Variable manufacturing costs
Allocated fixed manufacturing costs
Cost of goods available for sale
Deduct ending inventory 
Adjustment for production volume variance
Cost of goods sold

Gross margin

Operating costs:
Variable operating costs
Fixed operating costs
Total operating costs

Operating income

Question 3

Numerical reconcilliation

Answer 3

Absorption costing operating income

-

variable costing operating income

=

fixed manufacturing costs in ending inventory

-

fixed manufacturing costs in beginning inventory