Exercise 6-1 Computing unit and inventory costs under absorption costing LO P1

Trio Company reports the following information for the current year, which is its first year of operations.

Direct materials	$	10	per unit
Direct labor	$	17	per unit
Overhead costs for the year
Variable overhead	$	60,000	per year
Fixed overhead	$	120,000	per year
Units produced this year		20,000	units
Units sold this year		14,000	units
Ending finished goods inventory in units		6,000	units

Exercise 6-4 Variable costing income statement LO P2

Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,075 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.

Sales (825 $1,075)	$	886,875
Cost of goods sold (825 $425)		350,625
Gross margin		536,250
Selling and administrative expenses		220,000
Net income	$	316,250

Additional Information

Product cost per kayak totals $425, which consists of $325 in variable production cost and $100 in fixed production costthe latter amount is based on $107,500 of fixed production costs allocated to the 1,075 kayaks produced.

The $220,000 in selling and administrative expense consists of $75,000 that is variable and $145,000 that is fixed.

Required

1. Prepare an income statement for the current year under variable costing.