Question

The following information pertains to the first year of operation for Crystal Cold Coolers Inc.: 3,000 2.500 350 S Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($225,000 + 3,000 units) Total variable selling expenses ($15 per unit sold) Total fixed general and administrative expenses 60 37,500 65,000 Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. (Do not leave any numeric cells blank, enter a zero wherever required.) CRYSTAL COLD COOLERS INC. Full Absorption Costing Income Statement Less: Cost of Goods Sold Cost of Goods Available for Sale Cost of Goods Sold Gross Margin Less: Non-Manufacturing Expenses Net Operating Income

Answer 1

	Crystal Cold Coolers Inc.
	Full Absorption Costing
	Income Statement
	Sales (2500 X $350)		$   8,75,000
Less:	Cost of Goods Sold
	Direct material (3000 X $80)	$ 2,40,000
	Direct labor (3000 X $60)	$ 1,80,000
	Variable manufacturing overheads (3000 X $10)	$     30,000
	Fixed manufacturing overheads (3000 X $75)	$ 2,25,000
	Cost of Goods available for sale	$ 6,75,000
Less:	Ending Inventory [500 X ($80 + $60 + $10 + $75)]	$ 1,12,500
	Cost of Goods Sold		$   5,62,500
	Gross Margin		$   3,12,500
Less:	Non-manufacturing expenses
	Variable Selling and Administrative expenses	37500
	Fixed Selling and Administrative expenses	65000
	Total Selling and Administrative expenses		$   1,02,500
	Net Operating Income		$   2,10,000
	Crystal Cold Coolers Inc.
	Variable Costing
	Income Statement
	Sales (2500 X $350)		$   8,75,000
Less:	Variable Cost of goods sold:
	Direct material (3000 X $80)	$ 2,40,000
	Direct labor (3000 X $60)	$ 1,80,000
	Variable manufacturing overheads (3000 X $10)	$     30,000
	Goods available for sale	$ 4,50,000
Less:	Ending Inventory [500 X ($80 + $60 + $10)]	$     75,000
	Variable Cost of goods sold		$   3,75,000
Less:	Variable selling and administrative expenses (30000 X $4)		37500
	Contribution margin		$   4,62,500
Less:	Fixed Expenses:
	Fixed manufacturing overheads (3000 X $75)	$ 2,25,000
	Fixed Selling and Administrative expenses	65000
	Total Fixed expenses		$   2,90,000
	Net operating Income		$   1,72,500