Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,000 kayaks and sold 750. at a price of $1,000 each. At this first year-end, the company reported the following income statement information using absorption costing Sales (750 $1,000) Cost of goods sold (750 × $450) Gross margin Selling and administrative expenses Net income $750,000 337,500 412,500 240,000 $ 172,500 Additional Information a. Production cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production cost-the latter amount is based on $100,000 of fixed production costs allocated to the 1,000 kayaks produced. b. The $240,000 in selling and administrative expense consists of $95,000 that is variable and $145,000 that is fixed. Required 1. Prepare an income statement for the current year under variable costing. KENZI KAYAKING Variable Costing Income Statement
Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,000 kayaks and sold 750. at a price of $1,000 each. At this first year-end, the company reported the following income statement information using absorption costing Sales (750 $1,000) Cost of goods sold (750 × $450) Gross margin Selling and administrative expenses Net income $750,000 337,500 412,500 240,000 $ 172,500 Additional Information a. Production cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production cost-the latter amount is based on $100,000 of fixed production costs allocated to the 1,000 kayaks produced. b. The $240,000 in selling and administrative expense consists of $95,000 that is variable and $145,000 that is fixed. Required 1. Prepare an income statement for the current year under variable costing. KENZI KAYAKING Variable Costing Income Statement
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company
produced 1,000 kayaks and sold 750. at a price of $1,000 each. At this first year-end, the company
reported the following income statement information using absorption costing.
Sales (750 × $1,000)
Cost of goods sold (750 × $450)
Gross margin
Selling and administrative expenses
Net income
$750,000
337,500
412,500
240,000
$172,500
Additional Information
a. Production cost per kayak totals $450, which consists of $350 in variable production cost and $100 in
fixed production cost-the latter amount is based on $100,000 of fixed production costs allocated to the
1,000 kayaks produced.
b. The $240,000 in selling and administrative expense consists of $95,000 that is variable and $145,000
that is fixed.
Net income (loss)
Required
1. Prepare an income statement for the current year under variable costing.
KENZI KAYAKING
Variable Costing Income Statement
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