Question

A company produces a single product. Last year, fixed manufacturing overhead was $30,000, variable production costs were $48,000, fixed selling and administration costs were $20,000, and variable selling administrative expenses were $9,600. There was no beginning inventory. During the year, 3,000 units were produced and 2,400 units were sold at a price of $40 per unit. Under variable costing, net operating income would be

Answer 1

Answer:

Net operating income= (2,000)

Explanation:

Giving the following information:

fixed manufacturing overhead was $30,000

variable production costs were $48,000

fixed selling and administration costs were $20,000

variable selling administrative expenses were $9,600.

During the year, 3,000 units were produced and 2,400 units were sold for $40 per unit.

First, we need to calculate the unitary product variable cost:

Unitary product cost= 48,000/3,000= $16

Income statement:

Sales= 2,400*40= 96,000

Total variable cost= (2,400*16) + 9,600= (48,000)

Contribution margin= 48,000

fixed manufacturing overhead= (30,000)

fixed selling and administration costs were= (20,000)

Net operating income= (2,000)