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Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,050 kayaks and sold 800 at a price of $1,100 each. At year-end, the company reported the following income statement information using absorption costing. Sales (800 x $1,100) Cost of goods sold (800 x $500) Gross profit Selling and administrative expenses Income $ 880,000 400,000 480,000 230,000 $ 250,000 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 $105,000 of fixed overhead per year divided by 1,050 kayaks produced. b. The $230,000 in selling and administrative expenses consists of $75,000 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)

Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,050 kayaks and sold 800 at a price of $1,100 each. At year-end, the company reported the following income statement information using absorption costing. Sales (800 x $1,100) Cost of goods sold (800 x $500) Gross profit Selling and administrative expenses Income $ 880,000 400,000 480,000 230,000 $ 250,000 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 $105,000 of fixed overhead per year divided by 1,050 kayaks produced. b. The $230,000 in selling and administrative expenses consists of $75,000 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)

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,050 kayaks and sold 800 at a price of $1,100 each. At year-end, the company reported the following income statement information using absorption costing. Sales (800 x $1,100) Cost of goods sold (800 x $500) Gross profit Selling and administrative expenses Income $ 880,000 400,000 480,000 230,000 $ 250,000 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 $105,000 of fixed overhead per year divided by 1,050 kayaks produced. b. The $230,000 in selling and administrative expenses consists of $75,000 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)
Transcribed Image Text:Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,050 kayaks and sold 800 at a price of $1,100 each. At year-end, the company reported the following income statement information using absorption costing. Sales (800 x $1,100) Cost of goods sold (800 x $500) Gross profit Selling and administrative expenses Income $ 880,000 400,000 480,000 230,000 $ 250,000 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 $105,000 of fixed overhead per year divided by 1,050 kayaks produced. b. The $230,000 in selling and administrative expenses consists of $75,000 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)
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