Question

Ch 06 Ex 6-4 Saved Help Save & Exit Submit Check my work Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,075 kayaks and sold 825 at a price of $1,075 each. At this first year-end, the company reported the following income statement information using absorption costing. points $ eBook Sales (825 * $1,075) Cost of goods sold (825 * $400) Gross margin Selling and administrative expenses Net income 886,875 330,000 556,875 230,000 326,875 Hint $ Ask Additional Information Print References a. Product cost per kayak totals $400, which consists of $300 in variable production cost and $100 in fixed production cost-the latter amount is based on $107,500 of fixed production costs allocated to the 1,075 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. 2. Fill in the blanks: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the current year under variable costing.

Answer 1

KENZI KAYAKING Varaible Costing Income Statement 886875 247500 95000 Sales (825*1075) LESS: Variable Expense Variable Prodcut Cost (825*300) 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) 342500 544375 107500 135000 242500 301875 Net Income Under absorption costing is higher than net income undere Varaible costing By: Number of units add to (sunstrated from invenotry (1075-825) Fixed cost per unit Fixed costs added to inventory (250*100) The Dollar Difference in Variable Costing income and Absorption Costing income = 25000 250 100 25000 250 Fixed Overhead Per Units x 100 unit