Answer:
Explanation:
The computation of the net income under variable costing is presented below:
Sales (50,000 × $20) $1,000,000
Less: Variable production cost (70,000 × $10) -$700,000
Cost of goods available for sale $700,000
Less: Ending inventory (20,000 × $10) -$200,000
Cost of goods sold -$500,000
Gross contribution margin $500,000
Less: Variable Selling and administrative expenses (50,000 × 3) $150,000
Contribution margin $350,000
Less: Fixed overhead $10,000
Net income $40,000
