Homework SourseTrez Company began operations this year During this first ye
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.
Additional Information
Selling and administrative expenses consist of $400,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses.
The company\'s product cost of $30 per unit is computed as follows.
Required:
1. Prepare an income statement for the company under variable costing.
| Sales (80,000 units × $50 per unit) | $ | 4,000,000 | ||||
| Cost of goods sold | ||||||
| Beginning inventory | $ | 0 | ||||
| Cost of goods manufactured (100,000 units × $30 per unit) | 3,000,000 | |||||
| Cost of good available for sale | 3,000,000 | |||||
| Ending inventory (20,000 × $30) | 600,000 | |||||
| Cost of goods sold | 2,400,000 | |||||
| Gross margin | 1,600,000 | |||||
| Selling and administrative expenses | 540,000 | |||||
| Net income | $ | 1,060,000 | ||||
Solution
Answer
trez company product 100000 units and sold 80000 units
trez company
variable costing income statement
| particulars | amount |
| sales ( 80000 * 50 ) | 4000000 |
| less; variable cost of goods sold | |
| 80000 * ( 4 + 15 + 3 ) | 1760000 |
| gross contribution margin | 2240000 |
| less; variable marketing and admin ( 80000 * 1.75 ) | 140000 |
| contribution margin | 2100000 |
| less; fixed expenses | |
| fixed overhead 800000 | |
| selling and admin exp 400000 | 1200000 |
| net operating income | 900000 |
