Answer:
$172,000
Explanation:
The solution of net operating income (loss) under variable costing in Year 1 is provided below:-
To find out the net operating income (loss) first we need to follow some steps which are as follows:-
Step 1
Total unit product cost = Direct material + Direct Labor + Variable manufacturing overhead
= $11 + $6 + $4
= $21
Step 2
Gross contribution margin = Sales - (Beginning inventory + variable cost of goods manufactured + Variable cost of goods available for sale - Ending inventory)
= ($59 × 10,000) - ( 0 + ($21 × 11,000) - ($21 × 1000)
= $590,000 - (0 + $231,000 - $21,000)
= $590,000 - $210,000
= $380,000
and finally
Net Operating income = Gross contribution margin - Variable selling and administrative expenses - Manufacturing - Selling and administrative expenses
= $380,000 - (10,000 × $4) - $88,000 - $80,000
= $380,000 - $40,000 - $88,000 - $80,000
= $172,000
To reach we simply put the values into formula.
