Question

Flint Enterprises had the following cost and production information for April: Units Produced 20,000 Unit Sales Price $ 170 Manufacturing Cost Per Unit Direct Material $ 30 Direct Labor $ 15 Variable Manufacturing Overhead $ 13 Fixed Manufacturing Overhead ($500,000/20,000) = $ 25 Full Manufacturing Cost Per Unit $ 83 Nonmanufacturing Costs Variable Selling Expenses $ 77,000 Fixed General and Administrative Costs $ 100,000 Inventory increased by 3,000 units during April. What is Flint Enterprise's income under variable costing?

Answer 1

Answer:

Net operating income= $1,563,000

Explanation:

The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).

First, we need to calculate the total variable cost:

Total variable cost= (30 + 15 + 13)*20,000 + 77,000= 1,237,000

Now, we can determine the net operating income:

Sales= 20,000*170= 3,400,000

Total variable cost= (1,237,000)

Contribution margin= 2,163,000

Fixed overhead= (500,000)

Fixed General and Administrative Costs= (100,000)

Net operating income= 1,563,000