Question

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: A. a profit of $6,000.B. a profit of $4,000.C. a loss of $2,000.D. a loss of $4,400.

Answer 1

Answer:

net operating income= (2,000)

Explanation:

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

unitary variable production cost= 48,000/3,000= $16

Contribution margin income statement:

Sales= 2,400*40= 96,000

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

Contribution margin= 48,000

Fixed manufacturing overhead= (30,000)

Fixed selling and administration costs= (20,000)

net operating income= (2,000)