Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it...
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Accounting
Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 425 bikes were produced and 255 were sold. Income statement information under variable costing follows.
| Sales (255 $1,725) | $ 439,875 |
|---|---|
| Variable cost of goods sold (255 $675) | 172,125 |
| Variable selling and administrative expenses (255 $65) | 16,575 |
| Contribution margin | 251,175 |
| Fixed overhead | 85,000 |
| Fixed selling and administrative expenses | 90,000 |
| Income | $ 76,175 |
Prepare the company's income statement under absorption costing.
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