Cool Sky reports the following costing data on its product for its first year of
ID: 2410443 • Letter: C
Question
Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 40,000 units and sold 32,000 units at a price of $150 per unit. Manufacturing costs Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead for the yean $ 520,000 Selling and administrative costs Variable selling and administrative cost per unit Fixed selling and administrative cost per year $12 120,000 2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing COOL SKY Variable Costing Income Statement Net income (loss)Explanation / Answer
Variable Costing Income Statement:
Sales Value ($32,000*150) = $4,800,000
Less: Variable cost ($32,000*100) = $3,200,000
Contribution (SV-VC) = $1,600,000
Less: Fixed Cost = $520,000
Profit = $1,080,000
Less; Variable selling and admin = $384,000
($32,000*12)
Less: Fixed selling and admin = $120,000
Net Income = $576,000