Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 350 bikes were produced and 225 were sold; this left 25 bikes in ending inventory. The income statement information under variable costing follows. $ 388,125 Sales (225 x $1,725) Variable product cost (225 x $650) Variable selling and administrative expenses (225 x $55) Contribution margin Fixed overhead cost 146,250 12,375 229,500 59,500 90,000 $ 80,000 Fixed selling and administrative expense Net income 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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ΚENZΙ ΚΑΥΑΚΙNG
Absorption Costing Income Statement
Sales
$
388,125
Less: Cost of goods sold
Variable product costs
$
146,250
Fixed overhead costs
38,250
Cost of goods sold
Gross margin
184,500
203,625
Selling general and administrative expenses
Fixed selling and administrative costs
90,000
Variable selling and administrative expenses
12,375
Total selling general and administrative expenses
Net income (loss)
102,375
$
101,250
Net income under absorption costing is higher than net income under variable costing by:
125
Fixed overhead cost per unit
2$
170
Fixed costs added to inventory
2$
21,250
%24
Transcribed Image Text:ΚENZΙ ΚΑΥΑΚΙNG Absorption Costing Income Statement Sales $ 388,125 Less: Cost of goods sold Variable product costs $ 146,250 Fixed overhead costs 38,250 Cost of goods sold Gross margin 184,500 203,625 Selling general and administrative expenses Fixed selling and administrative costs 90,000 Variable selling and administrative expenses 12,375 Total selling general and administrative expenses Net income (loss) 102,375 $ 101,250 Net income under absorption costing is higher than net income under variable costing by: 125 Fixed overhead cost per unit 2$ 170 Fixed costs added to inventory 2$ 21,250 %24
Exercise 19-6 Absorption costing income statement LO P2
Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement
under absorption costing for external reporting. For its first month of operations, 35o bikes were produced and 225 were sold; this left
125 bikes in ending inventory. The income statement information under variable costing follows.
Sales (225 x $1,725)
Variable product cost (225 x $650)
Variable selling and administrative expenses (225 x $55)
Contribution margin
$ 388,125
146,250
12,375
229,500
59,500
Fixed overhead cost
Fixed selling and administrative expense
90,000
Net income
$ 80,000
1. Prepare this company's income statement for its first month of operations under absorption costing.
2. Fill in the blanks:
Transcribed Image Text:Exercise 19-6 Absorption costing income statement LO P2 Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 35o bikes were produced and 225 were sold; this left 125 bikes in ending inventory. The income statement information under variable costing follows. Sales (225 x $1,725) Variable product cost (225 x $650) Variable selling and administrative expenses (225 x $55) Contribution margin $ 388,125 146,250 12,375 229,500 59,500 Fixed overhead cost Fixed selling and administrative expense 90,000 Net income $ 80,000 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks:
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