Answer:
Moskowitz Corporation
The net operating income (loss) under variable costing in Year 2 is closest to:
= $56,000.
Explanation:
a) Data and Calculations:
Selling price per unit $ 91
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials $ 13
Direct labor $ 7
Variable manufacturing overhead $ 3 23
Contribution per unit $ 68
Fixed manufacturing overhead per year $480,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold $ 6
Fixed selling and administrative expense per year $ 84,000
Year 1 Year 2
Units in beginning inventory 0 3,000
Units produced during the year 12,000 10,000
Units sold during the year 9,000 10,000
Units in ending inventory 3,000 3,000
Year 2:
Income Statement:
Sales Revenue ($91 * 10,000) = $910,000
Variable manufacturing costs 230,000 ($23 * 10,000)
Variable selling and admin. 60,000 ($6 * 10,000)
Contribution margin $620,000
Fixed manufacturing costs 480,000
Fixed selling and admin. costs 84,000
Net operating income (loss) $ 56,000
