Prepare Variable Costing Income Statement
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Jo builds and sells boats using component parts purchased from a supplier and assembled and painted in Jo's factory. The boats sell for $1,200 each. Component parts cost $400 per boat, and each boat requires 12 labor hours to assemble at a cost of $14 per hour. Jo's factory is rented for $2,000 per month, which includes utilities. Jo receives a salary of $3,000 per month. The boats are sold by outside sales representatives who receive a 5% sales commission. 80 boats were produced and 75 sold during 2011. Prepare a variable costing income statement
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This solution illustrates how to prepare a variable costing income statement.
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Sales revenues $90,000 (75*$1,200)
Variable cost of goods sold:
Direct materials $30,000 (75*$400)
Direct ...
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