Question

Dapple Company incurred the following costs while producing 480 ​units: direct​ materials, $ 13 per​ unit; direct​ labor, $ 26 per​ unit; variable manufacturing​ overhead, $ 16 per​ unit; total fixed manufacturing overhead​ costs, $ 7 comma 680​; variable selling and administrative​ costs, $ 2 per​ unit; total fixed selling and administrative​ costs, $ 4 comma 320. There are no beginning inventories. What is the operating income using variable costing if 430 units are sold for $ 160 ​each?

Answer 1

Answer:

Operating Income       $32290  

Explanation:

The difference between the variable and absorption costing is that the fixed costs are treated as period costs in variable costing and as product costs in absorptioon costing. In variable costing all variable costs are treated as product costs.

Dapple Company

Income Statement

Variable Costing

Sales 430 units* $ 160 ​                                                    $ 68,800

Less

Variable Cost OF Goods Sold                                          ( 23650)  

Direct​ materials, $ 13 per​ unit * 430              5590

Direct​ labor, $ 26 per​ unit *430                    11180

Variable Manufacturing​

Overhead, $ 16 per​ unit *430                         6880            

Less

Variable selling and

Administrative​ costs, $ 2 per​ unit *430                                 (860)    

Contribution Margin                                                              44290

Less

Total Fixed Manufacturing overhead​ costs, $ 7, 680​;

Total Fixed selling and administrative​ costs, $ 4,320                        

Operating Income                                                               $32290