The Kolakoski Kandy Company Uses absorption costing. There report the following
ID: 2510842 • Letter: T
Question
The Kolakoski Kandy Company Uses absorption costing. There report the following information: The data for the current period shows the following: Beginning Inventory... -0- units Production this period... 53,000 units Sales Ending Inventory 51,000 units 2,000 units Sales and Cost data are as follows: Sales Price per Unit Materials Cost per unit Labor Cost per unit Variable Overhead Cost per unit $150 per unit 4 per unit 8 per unit 41 per unit Fixed Overhead $3,339,000 Fixed Operating Expenses $1,000,000 Required: 1. Prepare an income statement using Variable costing 2. Prepare an income statement using Absorption costingExplanation / Answer
Answer:
1
Kolkoski Kandy COMPANY
Income Statement
For the Year Ended 2017
Variable Costing
Sales (51,000 *$150,000)
$7,650,000
Variable Cost of Goods Sold:
Variable Cost of goods sold
(51000* (4+8+41))
$2,703,000
Contribution Margin
$4,947,000
less:
Fixed overhead
$3,339,000
Fixed operating Expanses
$1,000,000
$4,339,000
Net Income
$608,000
2
Kolkoski Kandy COMPANY
Income Statement
For the Year Ended 2017
absorption Costing
Sales (51,000 *$150,000)
$7,650,000
Variable Cost of Goods Sold:
Variable Cost of goods sold
(51000* (4+8+41+63))
$5,916,000
Contribution Margin
$1,734,000
less:
Fixed operating Expanses
$1,000,000
$1,000,000
Net Income
$734,000
Working notes for the answer:
In calculation for Variable Cost of goods sold as per absoption costing we consider the fixed opertion expases per unit
fixed opertion expases per unit
=3,339,000/53000
=63 per unit
Kolkoski Kandy COMPANY
Income Statement
For the Year Ended 2017
Variable Costing
Sales (51,000 *$150,000)
$7,650,000
Variable Cost of Goods Sold:
Variable Cost of goods sold
(51000* (4+8+41))
$2,703,000
Contribution Margin
$4,947,000
less:
Fixed overhead
$3,339,000
Fixed operating Expanses
$1,000,000
$4,339,000
Net Income
$608,000
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