Answer:
Net operating income= $1,563,000
Explanation:
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
<u>First, we need to calculate the total variable cost:</u>
Total variable cost= (30 + 15 + 13)*20,000 + 77,000= 1,237,000
<u>Now, we can determine the net operating income:</u>
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