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 1,025 kayaks and sold 775. at a price of $1,025 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (775 $1,025)	$	794,375
Cost of goods sold (775 $450)		348,750
Gross margin		445,625
Selling and administrative expenses		240,000
Net income	$	205,625

Additional Information

Product cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production costthe latter amount is based on $102,500 of fixed production costs allocated to the 1,025 kayaks produced.

The $240,000 in selling and administrative expense consists of $95,000 that is variable and $145,000 that is fixed.

Required

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

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 1,025 kayaks and sold 775. at a price of $1,025 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (775 $1,025)	$	794,375
Cost of goods sold (775 $450)		348,750
Gross margin		445,625
Selling and administrative expenses		240,000
Net income	$	205,625

Additional Information

Product cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production costthe latter amount is based on $102,500 of fixed production costs allocated to the 1,025 kayaks produced.

The $240,000 in selling and administrative expense consists of $95,000 that is variable and $145,000 that is fixed.

Required

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