Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At year-end, the company reported the following income statement information using absorption costing. Sales (775 × $1,025) $ 794,375 Cost of goods sold (775 × $500) 387,500 Gross profit 406,875 Selling and administrative expenses 250,000 Income $ 156,875 Additional Information a. Product cost per kayak under absorption costing totals $500, which consists of $400 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $102,500 of fixed overhead per year divided by 1,025 kayaks produced. b. The $250,000 in selling and administrative expenses consists of $105,000 that is variable and $145,000 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 1,025 kayaks and sold 775 at a price of $1,025 each. At year-end, the company reported the following income statement information using absorption costing.
| Sales (775 × $1,025) | $ 794,375 |
|---|---|
| Cost of goods sold (775 × $500) | 387,500 |
| Gross profit | 406,875 |
| Selling and administrative expenses | 250,000 |
| Income | $ 156,875 |
Additional Information
a. Product cost per kayak under absorption costing totals $500, which consists of $400 in direct materials, direct labor, and variable
b. The $250,000 in selling and administrative expenses consists of $105,000 that is variable and $145,000 that is fixed.
Prepare an income statement for the current year under variable costing.
Income statement under variable costing are as follows
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