Security Technology Inc. (STI) is a manufacturer of an electronic control system
ID: 2519840 • Letter: S
Question
Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $55 per unit and had sales of 24,000 units in the current year, 2015. STI has no inventory on hand at the beginning of 2015 and is projecting sales of 26,000 units in 2016. STI is planning the same production level for 2016 as in 2015, 25,000 units. The variable manufacturing costs for STI are $16 and the variable selling costs are only S0.50 per unit. The fxed manufacturing costs are $200,000 per year and the fixed selling costs are $500 per year Required: 1. Prepare an income statement for each year using full costing SECURITY TECHNOLOGY INC. Full Costing Income Statement 2015 2016 Less Cost of goods sold Available for sale Cost of goods sold Gross margin Less selling and administrative costs Operating income O Type here to searchExplanation / Answer
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SECURITY TECHNOLOGY INC. Full Costing Income Statement 2015 2016 Production 25000 25000 Sales 24000 26000 Sales 1320000 1430000 Cost of goods sold 576000 624000 Gross Profit 744000 806000 Selling Costs: Variable costs ($0.50 per unit) 12000 13000 Fixed costs 500 500 Total selling costs 12500 13500 Net income 731500 792500