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 |
Total fixed |
|
|
cost per year |
cost per year |
|
Direct materials |
$36,000 |
– |
|
Direct labor |
$24,000 |
– |
|
Manufacturing overhead |
$60,000 |
$72,000 |
|
Selling and administrative |
$12,000 |
$48,000 |
|
Direct materials |
|
|
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.