Hanks Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:
Units in beginning inventory...................................0
Units produced...............................................9,000
Units sold......................................................8,000
Sales.........................................................$80,000
Less cost of goods sold:
Beginning inventory.............................................. 0
Add cost of goods manufactured..................54,000
Goods available for sale...............................54,000
Less ending inventory....................................6,000
Cost of goods sold......................................48,000
Gross margin..............................................32,000
Less selling & admin. expenses....................28,000
Net operating income................................$ 4,000
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing.