Answer:
Instructions are listed below.
Explanation:
Giving the following information:
For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Under absorption costing the fixed costs are allocated to the production costs for the period.
Unitary cost= variable cost per unit + unitary fixed costs
Unitary cost= 650 + (72,000/400)= $830
Income statement:
Sales (240 × $1,650) $ 396,000
COGS= (240*830)= (199,200)
Gross profit= $196,800
Variable selling and administrative expenses= (13,200)
Fixed selling and administrative expense= (85,000)
Net operating income= $98,600
