Problem:
1. Vitamin T-Shirts, Inc. budgeted the following costs for its first year of manufacturing operations. These costs are based on a volume of 50,000 T-shirts produced and sold:
| |
Total variable
cost per year
|
Total fixed
cost per year
|
|
Direct materials
|
$36,000
|
-
|
|
Direct labor
|
$24,000
|
-
|
|
Manufacturing overhead
|
$60,000
|
$72,000
|
|
Selling and administrative
|
$12,000
|
$48,000
|
During the first year of operations, Vitamin actually produced 50,000 T-shirts but only sold 48,000 T-shirts. Actual costs did not fluctuate from the cost behavior patterns described above. The 48,000 T-shirts were sold for $10 per T-shirt.
Required:
Using the variable costing method, prepare Vitamin T-Shirts' income statement for the year.