Absorption costing income statement

Reference no: EM131101724

Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for its first year of operations follows.


Sales (80,000 units Af- $45 per unit)			$	3,600,000
Cost of goods sold
Beginning inventory	$	0
Cost of goods manufactured (100,000 units Af- $25 per unit)		2,500,000

Cost of good available for sale		2,500,000
Ending inventory (20,000 Af- $25)		500,000

Cost of goods sold				2,000,000

Gross margin				1,600,000
Selling and administrative expenses				510,000

Net income			$	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 $25 per unit is computed as follows.


Direct materials	$	5	per unit
Direct labor	$	8	per unit
Variable overhead	$	3	per unit
Fixed overhead ($900,000 / 100,000 units)	$	9	per unit

Required:

1.	Prepare an income statement for the company under variable costing.

Reference no: EM131101724

Questions Cloud

Investment required to build production facilities prohibits : You are the manager of BlackSpot Computers, which competes directly with Condensed Computers to sell high-powered computers to businesses. From the two businesses’ perspectives, the two products are indistinguishable. The large investment required to..

Theories and models of public administration : Research theories and models of public administration. Write a 500 to 700 word paper in which you describe the history of public administration. Include a description of at least two public administration models.

Are these materials appropriate for their intended audiences : What qualities or characteristics of these materials make them effective or ineffective? Are these materials appropriate for their intended audiences? What changes, if any, would you make to these materials to make them more useful and/or effective?

How did labor change with the rise of the factory system : How did labor change with the rise of the factory system in the northern United States? What role did religion play in American life during the Market Revolution?

Absorption costing income statement : Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for its first year of operations follows.

Role of a data steward considered innovative : Discuss how the data resource management methods of today will need to evolve as more types of data emerge. Why is the role of a data steward considered innovative? Explain.

Which employers are subject to affirmative action laws : voluntary affirmative action programs have sometimes subjected employers to charges of reverse discrimination. voluntary affirmative action programs have sometimes subjected employers to charges of reverse discrimination. How can an employer strik..

Selecting between forecast methods : Selecting between forecast methods. Suppose Bolivia has a nominal one-year risk-free interest rate of 40%, which is primarily due to the high level of expected inflation. The euro nominal one-year risk- free interest rate is 8%.

What information about diversity in us has helped you better : What information about diversity in the United States has helped you better understand or relate to others in ways that you may not have in the past? Summarize what you have learned about your own racial, ethnic, or cultural history?

User Account

All Pages