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2 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $3,600,000 2,000,000 1,600,000 490,000 $ 1,110,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($600,000/ 100,000 units) $ 4 per unit $ 12 per unit $ 3 per unit $ 6 per unit Required: Prepare an income statement for the company under variable costing.

2 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $3,600,000 2,000,000 1,600,000 490,000 $ 1,110,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($600,000/ 100,000 units) $ 4 per unit $ 12 per unit $ 3 per unit $ 6 per unit Required: Prepare an income statement for the company under variable costing.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Required: Prepare an income statement for the company under variable costing. Sales Less: Variable expenses TREZ Company Income Statement (Variable Costing)
Transcribed Image Text:Required: Prepare an income statement for the company under variable costing. Sales Less: Variable expenses TREZ Company Income Statement (Variable Costing)
2 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units × $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $ 3,600,000 2,000,000 1,600,000 490,000 $ 1,110,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($600,000 / 100,000 units) $ 4 per unit $ 12 per unit $ 3 per unit $6 per unit Required: Prepare an income statement for the company under variable costing.
Transcribed Image Text:2 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units × $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $ 3,600,000 2,000,000 1,600,000 490,000 $ 1,110,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($600,000 / 100,000 units) $ 4 per unit $ 12 per unit $ 3 per unit $6 per unit Required: Prepare an income statement for the company under variable costing.
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