Question

Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. The company's product cost of $30 per unit is computed as follows. Direct materials $ 4 per unit Direct labor $ 16 per unit Variable overhead $ 4 per unit Fixed overhead ($600,000 / 100,000 units) $ 6 per unit Required: 1. Prepare an income statement for the company under variable costing.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. The company's product cost of $30 per unit is computed as follows. Direct materials $ 4 per unit Direct labor $ 16 per unit Variable overhead $ 4 per unit Fixed overhead ($600,000 / 100,000 units) $ 6 per unit.

We don't have the information of selling price and units sold.

Income statement:

Sales

Variable costs:

Direct material

Direct labor

Variable manufacturing overhead

Total variable cost (-)

Contribution margin

Fixed costs (-)

Net operating income