Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,000 kayaks and sold 750 at a price of $1,000 each. At year-end, the company reported the following income statement information using absorption costing. Sales (750 x $1,000) Cost of goods sold (750x $425) Gross profit Selling and administrative expenses Income Additional Information $ 750,000 318,750 431,250 240,000 $ 191,250 a. Product cost per kayak under absorption costing totals $425, which consists of $325 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $100,000 of fixed overhead per year divided by 1,000 kayaks produced. b. The $240,000 in selling and administrative expenses consists of $95,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. Income KENZI Income Statement (Variable Costing) 4

Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,000 kayaks and sold 750 at a price of $1,000 each. At year-end, the company reported the following income statement information using absorption costing. Sales (750 x $1,000) Cost of goods sold (750x $425) Gross profit Selling and administrative expenses Income Additional Information $ 750,000 318,750 431,250 240,000 $ 191,250 a. Product cost per kayak under absorption costing totals $425, which consists of $325 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $100,000 of fixed overhead per year divided by 1,000 kayaks produced. b. The $240,000 in selling and administrative expenses consists of $95,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. Income KENZI Income Statement (Variable Costing) 4

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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