Question

Banana International

Banana International provided the below data (its first year of operations) for Product A that it sells for $216 per unit. $ $ 20 per unit 28 per unit Direct materials Direct labor Overhead costs Variable overhead Fixed overhead per year Selling and administrative expenses Variable Fixed Units produced and sold 6 per unit $ 160,000 per year $ 18 per unit $ 200,000 per year 20,000 units 1. Prepare an income statement for the year using absorption costing 2. Prepare an income statement for the year using variable costing. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using absorption costing. REY COMPANY Absorption Costing Income Statement Direct labor Direct materials Fixed overhead costs Fixed selling and administrative costs Net Income (los)

Answer 1

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Solution: Full Format Naming convention is not available, can be slightly different 4320000 Rey Company Absorption Costing Income Statement Sales (20000*216) Less: Cost of goods sold: Direct Materials (20000*20) Direct Labor (20000*28) Variable overhead cost (20000*6) Fixed overhead overhead 400000 560000 120000 160000 1240000 3080000 Cost of goods sold Gross Margin Less: Selling and admin expense: Variable (20000*18) Fixed 360000 200000 Total Selling and admin expense Net Income (loss) 560000 2520000

4320000 Rey Company Variable Costing Income Statement Sales (20000*216) Less: Variable expenses: Direct Materials (20000*20) Direct Labor (20000*28) Variable factory overhead (20000*6) Variable selling and admin expense (20000*18) 400000 560000 120000 360000 1440000 2880000 Total Variable expenses Contribution Margin Less: Fixed costs: Fixed overhead costs Fixed selling and administrative Total Fixed Costs Net operating income 160000 200000 360000 2520000