Exercise 06-4 Variable costing income statement LO P2

Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,100 kayaks and sold 850 at a price of $1,100 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (850 $1,100)	$	935,000
Cost of goods sold (850 $475)		403,750
Gross margin		531,250
Selling and administrative expenses		260,000
Net income	$	271,250

Additional Information

1. Product cost per kayak totals $475, which consists of $375 in variable production cost and $100 in fixed production costthe latter amount is based on $110,000 of fixed production costs allocated to the 1,100 kayaks produced.
2. The $260,000 in selling and administrative expense consists of $105,000 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:

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. KENZI KAYAKING Variable Costing Income Statement Net income (loss) Fixed costs added to inventory Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill in the blanks: The dollar difference in variable costing income and absorption costing income = units x fixed overhead per unit.