Question

​Barrett, Inc. reports the following information for the year ended December​ 31: Beginning Finished Goods Inventory 70 units Units produced 450 units Units sold 520 units Sales price $ 150 per unit Direct materials $ 25 per unit Direct labor $ 10 per unit Variable manufacturing overhead $ 15 per unit Fixed manufacturing overhead $ 15 comma 600 per year Variable selling and administrative costs $ 6 per unit Fixed selling and administrative costs $ 13 comma 000 per year The beginning Finished Goods Inventory costs were $ 3 comma 600 under absorption costing and $ 3 comma 500 under variable costing. What is the operating income using variable​ costing

Answer 1

Answer:

Operating Income 20,600

Explanation:

First Step will be to calculate the contribution of the begining inventory and the contribution of the untis produced in this period:

BEGINNING INVENTORY

70 units at $150 = $10,500

cost of BI                 $3,600

Contribution Begining Inventory         $6,900

get the production of this year contribution

Sales Units              150

Direct Materials 25

Direct Labour     10

Variable MO       15

Variable S&A       6

Total Variable           56

Contribution            94

Unit produced 450

Contribution Produced units 42300

Second, the operating income:

     Contribution Begining Inventory         $6,900

     + Contribution Produced units             42,300

                                    Total contribution = 49,200

 Fixed Cost

fixed MO 15,600

fixed S&A 13,000

                                       Total Fixed Cost    28,600

                                     Operating Income 20,600