Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for

Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows.

Sales (80,000 units $45 per unit) $ 3,600,000
Cost of goods sold
Beginning inventory $ 0
Cost of goods manufactured (100,000 units $25 per unit) 2,500,000
Cost of good available for sale 2,500,000
Ending inventory (20,000 $25) 500,000
Cost of goods sold 2,000,000
Gross margin 1,600,000
Selling and administrative expenses 610,000
Net income $ 990,000

Additional Information

Selling and administrative expenses consist of $450,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses.

The company's product cost of $25 per unit is computed as follows.

Direct materials $ 4 per unit
Direct labor $ 11 per unit
Variable overhead $ 3 per unit
Fixed overhead ($700,000 / 100,000 units) $ 7 per unit

Required: 1. Prepare an income statement for the company under variable costing. FILL IN CHART

TREZ Company
Variable Costing Income Statement
Total variable costs
Total fixed expenses
Net income (loss)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Data Analytics For Accounting

Authors: Vernon Richardson, Katie Terrell, Ryan Teeter

1st Edition

126406828X, 978-1264068289

More Books

Students also viewed these Accounting questions

Question

=+ What are the undesirable consequences?

Answered: 1 week ago