Exercise 19-4 Variable costing income statement LO P2 Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,000 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) Cost of goods sold (750 $450) Gross margin Selling and administrative expenses Net income 750,000 337,500 412,500 220,000 192,500 $ Additional Information a. Product 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 $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. 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. 750,000 KENZI KAYAKING Variable Costing Income Statement Sales Less: Variable costs Variable product costs IS Variable selling and administrative expenses 262,500 75,000 337,500 412,500 Total variable costs Contribution margin Less: Variable costs Fixed overhead costs Fixed selling and administrative costs S 100,000 145,000 Total fixed expenses Net income (loss) 245,000 167,500 IS Net income under absorption costing is higher than net income under variable costing by: Number of units added to(subtracted from) inventory Fixed overhead cost per unit Fixed costs added to inventory [ $ [ $ $ 77,500 78 1,000 78,000 Required 1 Required 2 > 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 x $1,000) Cost of goods sold (750 * $450) Gross margin Selling and administrative expenses Net income 750,000 337,500 412,500 220,000 192,500 $ Additional Information a. Product 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 $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. 2. Fill in the blanks: 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 fixed overhead per unit.
