QUESTION 3

1. Trez Company has the following information for 2019, its first year of operations:

   Units produced	100,000
   Units sold	80,000 at $50 per unit
   Manufacturing costs:
   Direct materials	$5 per unit
   Direct labor	$14 per unit
   Variable manufacturing overhead	$2 per unit
   Fixed manufacturing overhead	$900,000 total
   Selling & administrative expenses:
   Variable selling & administrative expenses	$2.25 per unit
   Fixed selling & administrative expenses	$350,000 total

   Answer the following questions to complete the variable costing income statement. Items in the first (left) column should be answered with words. Items in the other three columns should be answered as a numerical amount. Do not use dollars signs or commas in any of the numbers. If a number needs to be shown as negative, use parenthesis, but do not use a minus sign.

   Below is a word bank. You may not need some words from the word bank. You may not abbreviate except as shown below. Type the words exactly as shown.

   Sales

   Rent Revenue

   Cash

   Accounts Receivable

   Direct Materials

   Direct Labor

   Indirect Materials

   Indirect Labor

   Variable manufacturing overhead

   Fixed manufacturing overhead

   Variable selling & administrative expenses

   Fixed selling & administrative expenses

   Contribution margin

   Gross profit

   Beginning inventory

   Plus Ending inventory

   Less Ending inventory

   Net income

   Net loss

   Trez Company

   Income Statement (Variable Costing)

   Year Ended December 31, 2019

   Beginning inventory
   Variable cost of goods manufactured:
   Variable cost of goods available for sale
   Variable cost of goods sold
   Contribution margin
   Fixed expenses:
   Total fixed expenses