FILL IN THE INCOME STATEMENT Polk Company sells the fishing lures for $27.00. Du

Question

FILL IN THE INCOME STATEMENT

Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,800 lures and produced 95,000 lures.

Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50)

ANSWER: Manufacturing cost per unit is $16.96

Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.

Variable Cost per Unit

Direct material

$8.10

Direct labor

$2.65

Variable manufacturing overhead

$6.21

Fixed Costs per Year

Direct materials

$8.10

Direct labor

Variable selling and administrative expenses

$4.21

Fixed manufacturing overhead                                   $253,650

Fixed selling and administrative expenses                  $259,308

Prepare a variable costing income statement for 2012.

POLK COMPANY

Income Statement

For the Year Ended December 31, 2012

Variable Costing

Sales

Variable cost of goods sold

Variable selling and administrative expenses

Contribution margin

Fixed manufacturing overhead

Fixed selling and administrative expenses

Net income (loss)

Fill in the income statement.  

Direct material

$8.10

Direct labor

$2.65

Variable manufacturing overhead

$6.21

Explanation / Answer

Unit product cost under variable costing = 8.1+2.65+6.21 = 16.96

sales (80800 *27) 2,181,600 less:Variable cost of goods sold (80800* 16.96) (1,370,368) Variable selling   (80800 * 4.21) (340,168) contribution margin 471,064 Less:Fixed manufacturing (253650) Fixed selling (259308) net income /(loss)    [471064-253650-259308] 41894

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