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Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Line Item Description Amount Amount Sales (11,000 units) $1,320,000 Production costs (14,000 units): Direct materials $621,600 Direct labor 298, 200 Variable factory overhead 149,800 Fixed factory overhead 99,400 1,169,000 Selling and administrative expenses: Variable selling and administrative expenses $181,200 Fixed selling and administrative expenses 70, 100 251,30 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description Sales Variable cost of goods sold Manufacturing margin Correct Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs Operating income Amount Amount 1,320,000

Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Line Item Description Amount Amount Sales (11,000 units) $1,320,000 Production costs (14,000 units): Direct materials $621,600 Direct labor 298, 200 Variable factory overhead 149,800 Fixed factory overhead 99,400 1,169,000 Selling and administrative expenses: Variable selling and administrative expenses $181,200 Fixed selling and administrative expenses 70, 100 251,30 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description Sales Variable cost of goods sold Manufacturing margin Correct Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs Operating income Amount Amount 1,320,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Line Item Description Amount Amount Sales (11,000 units) $1,320,000 Production costs (14,000 units): Direct materials $621,600 Direct labor 298, 200 Variable factory overhead 149,800 Fixed factory overhead 99,400 1,169,000 Selling and administrative expenses: Variable selling and administrative expenses $181,200 Fixed selling and administrative expenses 70, 100 251,30 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description Sales Variable cost of goods sold Manufacturing margin Correct Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs Operating income Amount Amount 1,320,000
Transcribed Image Text:Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Line Item Description Amount Amount Sales (11,000 units) $1,320,000 Production costs (14,000 units): Direct materials $621,600 Direct labor 298, 200 Variable factory overhead 149,800 Fixed factory overhead 99,400 1,169,000 Selling and administrative expenses: Variable selling and administrative expenses $181,200 Fixed selling and administrative expenses 70, 100 251,30 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description Sales Variable cost of goods sold Manufacturing margin Correct Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs Operating income Amount Amount 1,320,000
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