Slams Inc., a manufacturer of tennis rackets, began operations this year. The co

Question

Slams Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. Each racket was sold at a price of $90. Fixed overhead costs are $78,000 and fixed selling and administrative costs are $65,200. The company also reports the following per unit costs for the year

Prepare an income statement under absorption costing:

Slams Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. Each racket was sold at a price of $90. Fixed overhead costs are $78,000 and fixed selling and administrative costs are $65,200. The company also reports the following per unit costs for the year

Prepare an income statement under absorption costing:

Explanation / Answer

Construct The Absorption Costing Unit Product Cost Amount $ Variable Manufacturing Cost 25 Fixed Manufacturing Cost 13.00 (78000/6000 units) Absorption costing unit prroduct cost 38.00 Construct the Absorption Costing Income Statement Year 1 Sales (4900*90) $441,000 Cost of Goods sold (4900*38) 186200 Gross Margin $254,800 Selling and distribution expense 75,000 (4900*2+65200) Net operating income 179,800

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