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

Sales (850 $1,100)	$ 935,000
Cost of goods sold (850 $400)	340,000
Gross profit	595,000
Selling and administrative expenses	260,000
Income	$ 335,000

Additional Information

a. Product cost per kayak under absorption costing totals $400, which consists of $300 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $110,000 of fixed overhead per year divided by 1,100 kayaks produced. b. The $260,000 in selling and administrative expenses consists of $105,000 that is variable and $155,000 that is fixed. make an income statement for the current year under variable consists of $300 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $110,000 of fixed overhead per year divided by 1,100 kayaks produced. b. The $260,000 in selling and administrative expenses consists of $105,000 that is variable and $155,000 that is fixed. make an income statement for the current year under variable costing.

Answer rating: 100% (QA)

Here is the income statement under variable costing Sales 850 1100 935000 Varia... View the full answer