Answer:
Net operating income= 11,600
Explanation:
Giving the following information:
Selling price $118
Variable costs per unit:
Direct materials $37
Direct labor $23
Variable manufacturing overhead $3
Variable selling and administrative expense $5
Fixed costs:
Fixed manufacturing overhead $73,500
Fixed selling and administrative expense $29,900
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 per unit:</u>
Total variable cost per unit= 37 + 23 + 3 + 5= $68
<u>Income statement:</u>
Sales= 118*2,300= 271,400
Total variable cost= 68*2,300= (156,400)
Total contribution margin= 115,000
Fixed manufacturing overhead= (73,500)
Fixed selling and administrative expense= (29,900)
Net operating income= 11,600
