Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. In this first year- end, the company reported the following income statement information using absorption costing, Sales (775 $1,025) Cost of goods sold (775 * $450) $ 7,94,375 3,48,750 Gross margin 4,45,625 Selling and administrative expenses 2,10,000 Net income $2,35,625 Additional Information: a. Product cost per kayak totals $450, which consists of $250 in variable production cost and $100 in fixed production cost- the latter amount is based on $102,500 of fixed production costs allocated to the 1,025 Kayaks produced. b. The $210,000 in selling and administrative expense consists of $75,000 that is variable and $135,000 that is fixed. Prepare an income statement for the current year under variable costing.

Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. In this first year- end, the company reported the following income statement information using absorption costing, Sales (775 $1,025) Cost of goods sold (775 * $450) $ 7,94,375 3,48,750 Gross margin 4,45,625 Selling and administrative expenses 2,10,000 Net income $2,35,625 Additional Information: a. Product cost per kayak totals $450, which consists of $250 in variable production cost and $100 in fixed production cost- the latter amount is based on $102,500 of fixed production costs allocated to the 1,025 Kayaks produced. b. The $210,000 in selling and administrative expense consists of $75,000 that is variable and $135,000 that is fixed. Prepare an income statement for the current year under variable costing.

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...
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