Answer:
Sales ( 118,000 × $ 320) 37,760,000
<em>Less</em> Cost of Goods Sold : (14,909,500)
<em>Opening Stock (3,000 units × $135) 40,500</em>
<em>Add</em><em> Cost of Goods Manufactured</em>
<em>Direct materials ($ 40 × 118,000 units) 4,720,000</em>
<em>Direct labor ($ 62 × 118,000 units) 7,316,000</em>
<em>Variable overhead 3,220,000</em>
<em>Less </em><em>Closing Stock (3,000 × ($ 40+$ 62+$27)) (387,000)</em>
Contribution 22,850,500
<em>Less</em> Operating Expenses :
Fixed overhead (7,400,000)
Selling and administrative costs :
Variable ( 1,416,000)
Fixed (4,600,000)
Net Income 9,434,500
Explanation:
Variable Product Cost = Direct Materials + Direct Labor + Variable Overheads
Variable Costing - Period Cost = Fixed Overheads + All Non- Manufacturing Expenses