4. Trez Company began operations this year. During this first year, the company

Question

4. Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows 4,000,000 Sales (80,000 units x $50 per unit) Cost of goods sold Beginning inventory Cost of goods manufactured (100,000 units $30 per unit) 3,000,000 Cost of good available for sale Ending irventory (20,000 x $30) 3,000,000 600,000 Cost of goods sold 1,600,000 530,000 Gross margn Selling and administrative expenses Net income $ 1,070,000 a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2 25 per unit in ariable selling and administrative expenses b. The company's product cost of $30 per unt is computed as follows Direct materials Direct labor Variable overhead Fixed overhead (5900,000 100,000 unds) $ 9 per unit $ 5 per unit $ 14 per unit S 2 per unit Type here to search

Explanation / Answer

Units produced = 100,000 units

Units sold = 80,000 units

Variable costs = Unit product cost × Units sold = 21×80,000 = $1,680,000

TREZ Company

Variable Costing Income Statement

Direct materials $5 Direct labor 14 Variable overhead 2 Unit product cost $21

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