Polk Company builds custom fishing lures for sporting goods stores. In its first
ID: 2454090 • Letter: P
Question
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
Variable Cost per Unit Direct materials $7.95
Direct labor $2.60
Variable manufacturing overhead $6.10 Variable selling and administrative expenses $4.13
Fixed Costs per Year Fixed manufacturing overhead $250,734
Fixed selling and administrative expenses $254,506
Polk Company sells the fishing lures for $26.50. During 2012, the company sold 81,500 lures and produced 95,700 lures.
prepare a variable costing income statement for 2012. POLK COMPANY Income Statement For the Year Ended December 31, 2012 Variable Costing
Explanation / Answer
Quantity Rate Total Variable Cost: Material 95700 6.1 583770 Direct Labour 2.6 248820 Manufacturing Overhead 6.1 583770 Selling and Administrative Expenses 4.13 395241 Total Variable Cost 95700 18.93 1811601 Less: Ending Inventory 14200 18.93 268806 Cost of Goods Sold 81500 18.93 1542795 Sales 26.5 2159750 Total Contribution 616955 Less: Fixed Cost: Manufacturing Overhead 250734 Selling and Administrative Expenses 254506 Total Fixed Cost 505240 Net Income 111715