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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
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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