Aces Inc., a manufacturer of tennis rackets, began operations this year. The com

Question

Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,700 rackets and sold 5,600. Each racket was sold at a price of $97. Fixed overhead costs are $91,790 and fixed selling and administrative costs are $65,900. The company also reports the following per unit variable costs for the year: the following per unit variable Variable product costs Variable selling and administrative expenses $25.7e 2.70 Prepare an income statement under absorption costing. ACES INC Absorption Costing Income Statement Sales Less: Cost of goods sold Variable production costs Selling general and administrative expenses Net income (loss)

Explanation / Answer

INCOME STATEMENT UNDER ABSORPTION COSTING

Selling and administration directly related to the unit sold

Variable overhead cost related to the unit produced

Sales (5600@$67) $543,200 Production cost Variable overhead cost(6700@$25.7) $172,190 Fixed overhesd cost $91,790 Non production cost Variable selling cost (5600@$2.7) $15,120 Fixed selling cost $65,900 Total cost $345,000 Profit( sales - total cost) $198,200

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