Question

Exercise 19-4 Variable costing income statement LO P2 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) Cost of goods sold (800x $450) Gross margin $ 840,000 360,000 480,000 230,000 $ 250,000 Selling and administrative expenses Net income ces Additional Information a. Product cost per kayak totals $450, which consists of $350 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. b. The $230,000 in selling and administrative expense consists of $95,000 that is variable and $135,000 that is fixed. Required 1. Prepare an income statement for the current year under variable costing. KENZI KAYAKING Variable Costing Income Statement Next

Answer 1

ΚEΝZΙ ΚΑYAKI NG Varaible Costing Income Statement Sales (800 1050) LESS: Variable Expense Variable Prodcut Cost (800*350)) Variable Selling and Administrative Expense Total Varible Expenses Contribution Magin LESS:Fixed Expenses Fixed manufacturing Overheads Fixed Selling and Administrative Expenses Total fixed Expenses Net income (loss) 840000 280000 95000 375000 465000 105000 135000 240000 225000 Net Income Under absorption costing is higher than net income undere Varaible costing By: Number of units add to (sunstrated from) invenotry (1050-800) Fixed cost per unit Fixed costs added to inventory (250*100) 25000 250 100 25000