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 $1,050 each. At year-end, the company reported the following income statement information using absorption costing. Sales (800 x $1,050) Cost of goods sold (800 × $475) Gross profit Selling and administrative expenses Income Additional Information a. Product cost per kayak under absorption costing totals $475, which consists of $375 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 $220,000 in selling and administrative expenses consists of $75,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI $ 840,000 380,000 460,000 220,000 $ 240,000 Income Statement (Variable Costing)

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Chapter1: Financial Statements And Business Decisions
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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 $1,050 each. At year-end, the company reported the following income statement information using absorption costing.
Sales (800 × $1,050)
Cost of goods sold (800 × $475)
Gross profit
Selling and administrative expenses
Income
Additional Information
a. Product cost per kayak under absorption costing totals $475, which consists of $375 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 $220,000 in selling and administrative expenses consists of $75,000 that is variable and $145,000 that is fixed.
Prepare an income statement for the current year under variable costing.
Income
KENZI
$ 840,000
380,000
460,000
220,000
$ 240,000
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 $1,050 each. At year-end, the company reported the following income statement information using absorption costing. Sales (800 × $1,050) Cost of goods sold (800 × $475) Gross profit Selling and administrative expenses Income Additional Information a. Product cost per kayak under absorption costing totals $475, which consists of $375 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 $220,000 in selling and administrative expenses consists of $75,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. Income KENZI $ 840,000 380,000 460,000 220,000 $ 240,000 Income Statement (Variable Costing)
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