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 × $40 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $ 3,200,000 1,600,000 1,600,000 510,000 $ 1,090,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. b. The company's product cost of $20 per unit consists of the following. Direct materials $ 4 per unit Direct labor Variable overhead $ 4 per unit $ 3 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 Income Statement (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 × $40 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $ 3,200,000 1,600,000 1,600,000 510,000 $ 1,090,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. b. The company's product cost of $20 per unit consists of the following. Direct materials $ 4 per unit Direct labor Variable overhead $ 4 per unit $ 3 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 Income Statement (Variable Costing)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 × $40 per unit)
Cost of goods sold
Gross profit
Selling and administrative expenses
Income
$ 3,200,000
1,600,000
1,600,000
510,000
$ 1,090,000
Additional Information
a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2 per unit in variable selling and
administrative expenses.
b. The company's product cost of $20 per unit consists of the following.
Direct materials
$ 4 per unit
Direct labor
Variable overhead
$ 4 per unit
$ 3 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
Income Statement (Variable Costing)
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