Oak Mart, a producer of solid oak tables, reports the following data from its first year of business.
| Sales price per unit | $ 365 | per unit |
|---|---|---|
| Units produced this year | 125,000 | units |
| Units sold this year | 125,000 | units |
| Variable selling and administrative expenses | $ 21 | per unit |
| Fixed selling and administrative expenses | $ 4,645,000 | per year |
| Direct materials | $ 49 | per unit |
| Direct labor | $ 71 | per unit |
| Variable overhead | $ 37 | per unit |
| Fixed overhead | $ 8,500,000 | per year |
1. Prepare the current-year income statement using variable costing.
Explanation
Sales (125,000 units × $365 per unit) = $45,625,000
Variable selling and administrative expenses (125,000 × $21) = $2,625,000
| Direct materials ($49 × 125,000) | $ 6,125,000 |
|---|---|
| Direct labor ($71 × 125,000) | 8,875,000 |
| Variable overhead ($37 × 125,000) | 4,625,000 |
| Variable cost of goods sold | $ 19,625,000 |