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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. $ 750,000 300,000 Sales (750 x $1,000) Cost of goods sold (750 x $400) Gross profit Selling and administrative expenses 450,000 250,000 Income $ 200,000 Additional Information a. Product cost per kayak under absorption costing totals $400, which consists of $300 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 $250,000 in selling and administrative expenses consists of $95,000 that is variable and $155,000 that is fixed. Prepare an income statement for the current year under variable costing.

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. $ 750,000 300,000 Sales (750 x $1,000) Cost of goods sold (750 x $400) Gross profit Selling and administrative expenses 450,000 250,000 Income $ 200,000 Additional Information a. Product cost per kayak under absorption costing totals $400, which consists of $300 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 $250,000 in selling and administrative expenses consists of $95,000 that is variable and $155,000 that is fixed. Prepare an income statement for the current year under variable costing.

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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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. $ 750,000 300,000 450,000 250,000 Sales (750 x $1,000) Cost of goods sold (750 x $400) Gross profit Selling and administrative expenses Income $ 200,000 Additional Information a. Product cost per kayak under absorption costing totals $400, which consists of $300 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 $250,000 in selling and administrative expenses consists of $95,000 that is variable and $155,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI Income Statement (Variable Costing) Income
Transcribed Image Text: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. $ 750,000 300,000 450,000 250,000 Sales (750 x $1,000) Cost of goods sold (750 x $400) Gross profit Selling and administrative expenses Income $ 200,000 Additional Information a. Product cost per kayak under absorption costing totals $400, which consists of $300 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 $250,000 in selling and administrative expenses consists of $95,000 that is variable and $155,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI Income Statement (Variable Costing) Income
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