Aces Inc., a manufacturer of tennis rackets, began operations this year. The com

Question

Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 5,700 rackets and sold 4,600. Each racket was sold at a price of $87 Fixed overhead costs are $72,390, and fixed selling and administrative costs are $64,900. The company also reports the following per unit costs for the year: Variable production costs Variable selling and administrative expenses 24.70 $ 1.70 Required Prepare an income statement under variable costing. ACES INC. Variable Costing Income Statement Net income (loss)

Explanation / Answer

Income statement (variable costing) Sales (4,600*$87) 400,200 Variable expenses Variable production cost (4,600 * 24.70) 113,620 Variable Selling and administrative expenses (4,600*1.70) 7,820 Total variable expenses 121,440 Contribution margin 278,760 Fixed expenses Fixed overhead 72,390 Fixed Selling and administrative expenses 64,900 Total fixed expenses 137,290 Net income 141,470

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