Question

Seed Ch 19 Homework 4 Exerclse 10-9 Income statement under absorption costing and varlable costing LO P1, P2 The following information applies to the questions displayed below) Cool Sky reports the following costing data on ts product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $140 per unt Part 4 of 4 166 polnts Manufacturing costs Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead for the year Selling and adninistrative costs Variable selling and adninistrative cost per unit Fixed selling and administrative cost per year 22 $528,0e0 $ 11 eBookc $1e5,000 Hint Exerclse 19-9 Part 2b Print 2b. Assume the company uses varlable costing. Prepare its Income statement for the year under varlable costing. Relerences COOL SKY Variable Costing Income Statement $ 5.040,000 Sales Less: Variable costs $(398,000 Variable selling and administrative expenses 3240.000 Variable product costs 2844.000 Total variable costs Contribution margin Less: Fored expenses Foxed overhead costs Fixed selling and administrative costs Net income (loss)

Answer 1

COOL SKY

Variable Costing Income Statement

Sales (36,000 units * $140)		$5,040,000
Less: Variable costs
Direct materials (36,000 units * $60)	$2,160,000
Direct labor (36,000 units * $22)	792,000
Variable overhead costs (36,000 units * $8)	288,000
Variable selling and administrative expenses (36,000 units * $11)	396,000
Total variable costs		$3,636,000
Contribution margin		1,404,000
Less: Fixed expenses
Fixed overhead costs	528,000
Fixed selling and administrative costs	105,000
Total fixed expenses		633,000
Net income (loss)		$771,000