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 reportedthe following income statement information using absorption costing.Sales (750 $1,000) $750,000Cost of goods sold (750 $450) 337,500Gross margin 412,500Selling and administrative expenses 240,000Net income $172,500Additional Information:a. Production cost per kayak totals $450, which consists of $350 invariable production cost and $100 in fixed production cost the latteramount is based on $100,000 of fixed production costs allocated to the1,000 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:Prepare an income statement for the current year under variablecosting.

Step 1: Key InformationSelling Price Per Kayak = $1,000Variable Production Cost Per Kayak =…

Answered: Kenzi Kayaking, a manufacturer of…

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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Use the following information for Brief Exercise: Morning Smiles Coffee Company manufactures Stoneware French Press coffee makers and sold 8,000 coffee makers during the month of March at a total cost of 612,500. Each coffee maker sold at a price of 100. Morning Smiles also incurred two types of selling costs: commissions equal to 5% of the sales price and other selling expense of 45,000. Administrative expense totaled 47,500. 2-33 Income Statement Percentages Refer to the information for Morning Smiles Coffee Company on the previous page. Required: Prepare an income statement for Morning Smiles for the month of March and calculate the percentage of sales revenue represented by each line of the income statement. (Note: Round answers to one decimal place.)
Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.
Evans Company had total sales of 3,000,000 for fiscal 20x5. The costs of quality-related activities are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?
Cost of Goods Manufactured, Income Statement W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for 400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips accounting records provide the following information: Required: 1. Prepare a statement of cost of goods manufactured. 2. Compute the average cost of producing one unit of product in the year. 3. Prepare an income statement for external users.
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
Carr Company provides human resource consulting services to small- and medium-sized companies. Last year, Carr provided services to 700 clients. Total fixed costs were $159.000 with total variable costs of $87x500. Based on this information, complete this chart:
Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,050 kayaks and sold 800 at a price of $1,050 each. At this first year-end, the company reported the following income statement information using absorption costing. Sales (800 × $1,050) $ 840,000 Cost of goods sold (800 × $500) 400,000 Gross margin 440,000 Selling and administrative expenses 230,000 Net income $ 210,000   Additional Information Product cost per kayak totals $500, which consists of $400 in variable production cost and $100 in fixed production cost—the latter amount is based on $105,000 of fixed production costs allocated to the 1,050 kayaks produced. The $230,000 in selling and administrative expense consists of $75,000 that is variable and $155,000 that is fixed. Required:1. Prepare an income statement for the current year under variable costing.2. Fill in the blanks:
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) $ 840,000 Cost of goods sold (800 × $450) 360,000 Gross profit 480,000 Selling and administrative expenses 220,000 Income $ 260,000 Additional Information a. Product cost per kayak under absorption costing totals $450, which consists of $350 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 $85,000 that is variable and $135,000 that is fixed.Prepare an income statement for the current year under variable costing.
Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At year-end, the company reported the following income statement information using absorption costing.   Sales (775 × $1,025) $ 794,375 Cost of goods sold (775 × $500) 387,500 Gross profit 406,875 Selling and administrative expenses 250,000 Income $ 156,875 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 $102,500 of fixed overhead per year divided by 1,025 kayaks produced.b. The $250,000 in selling and administrative expenses consists of $105,000 that is variable and $145,000 that is fixed.Prepare an income statement for the current year under variable costing.
Wind Fall, a manufacturer of leaf blowers, began operations this year. During this year, the company produced 10,000 leaf blowers and sold 8,500. At year-end the company reported the following income statement using absorption costing. Sales (8,500 x $45): 382,500 cost of goods sold (8,500 x $20): 170,000 gross margin: $212,500 selling and administrative expenses: 60,000 net income: $152,500 Production costs per leaf blower total $20, which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced). Fifteen percent of total selling and administrative expenses are variable. Compute net income under variable costing. $146,500 $158,500 $237,500 $206,500 $246,500
rez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units \times $45 per unit) $ 3,600,000 Cost of goods sold 2,000,000 Gross profit 1,600,000 Selling and administrative expenses 580,000 Income $ 1,020,000 Additional Information Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses. The company's product cost of $25 per unit consists of the following. Direct materials $ 4 per unit Direct labor $10 per unit Variable overhead $ 2 per unit Fixed overhead ($900,000 / 100,000 units) $ 9 per unit Required: Prepare an income statement for the company under variable costing.
Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units × $45 per unit) $ 3,600,000 Cost of goods sold 2,000,000 Gross profit 1,600,000 Selling and administrative expenses 560,000 Income $ 1,040,000 Additional Information Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. The company's product cost of $25 per unit consists of the following. Direct materials $ 4 per unit Direct labor $ 10 per unit Variable overhead $ 4 per unit Fixed overhead ($700,000 / 100,000 units) $ 7 per unit Required:Prepare an income statement for the company under variable costing.

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