1. Prepare an income statement for the current year under variable costing. 2. Fill in the blanks:
1. Prepare an income statement for the current year under variable costing. 2. Fill in the blanks:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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:
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