Reference no: EM133161272
Question - 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 x $1,050) $840,000
Cost of goods sold (800 x $450) 360,000
Gross profit 480,000
Selling and administrative expenses 240,000
Income $240,000
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 $240,000 in selling and administrative expenses consists of $105,000 that is variable and $135,000 that is fixed.
Required - Prepare an income statement for the current year under variable costing.