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Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the...

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Accounting

Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,025 kayaks and sold 775. at a price of $1,025 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (775 $1,025) $ 794,375
Cost of goods sold (775 $475) 368,125
Gross margin 426,250
Selling and administrative expenses 220,000
Net income $ 206,250
Additional Information
a.

Production cost per kayak totals $475, which consists of $375 in variable production cost and $100 in fixed production costthe latter amount is based on $102,500 of fixed production costs allocated to the 1,025 kayaks produced.
b.

The $220,000 in selling and administrative expense consists of $85,000 that is variable and $135,000 that is fixed.

Required
1.

Prepare an income statement for the current year under variable costing.

KENZI KAYAKING
Variable Costing Income Statement
Net income (loss)

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