Prepare an income statement for the current year

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Question - Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,000 kayaks and sold 750. at a price of $1,000 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (750 × $1,000) $ 750,000

Cost of goods sold (750 × $450) 337,500

Gross margin 412,500

Selling and administrative expenses 240,000

Net income $ 172,500

Additional Information

a. Production cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production cost-the latter amount is based on $100,000 of fixed production costs allocated to the 1,000 kayaks produced.

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

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

Reference no: EM132049733

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