Question

Ormand Company uses variable costing for internal decision-making purposes and has the following information for June: Sales $900,000 Variable cost of goods sold 440,000 Fixed manufacturing costs 160,000 Variable selling and administrative expenses 100,000 Fixed selling and administrative expenses 70,000 Determine the income from operations for June.

Answer 1

Answer:

$130000

Explanation:

Given: Sales revenue= $900000.

          Variable cost of goods sold= $440000.

          Fixed manufacturing cost= $160000

          Variable selling and administration expense= $100000.

          Fixed selling and administrative expense= $70000.

Now, finding the income from operation for June.

Formula; Income from operation= $Revenue- cost\ of\ goods\ sold- administrative\ expense$

⇒ Income from operation=  $\ 900000- \ 440000-\ 160000- (\ 100000+\ 70000)$

⇒ Income from operation= $\ 900000- \ 600000- \ 170000$

⇒ Income from operation= $\ 900000 - \ 770000$

∴ Income from operation= $\ 130000$

Hence, $130000 is the income from operation for June.