Question

Red and White Company reported the following monthly data:Units produced $2,000 unitsSales price $25 per unitDirect materials $1 per unitDirect labor $2 per unitVariable overhead $3 per unitFixed overhead $8,000 in totalWhat is Red and White's net income under variable costing if 980 units are sold and operating expenses are $12,000?A. $(1,380)B. $(2,000)C. $2,700D. $6,620E. $10,620

Answer 1

Answer:

A. $(1,380)

Explanation:

The computation of the net income under the variable costing is shown below:

Net Income /(loss) = Sales Revenue - Variable cost - Fixed overhead - Operating expenses

 = (980 × $25) - (980 × $6) - $8,000 - $12,000

= $24,500 - $5,880 - $8,000 - $12,000

= ($1,380)

Hence, the correct option is A. ($1,380)

We simply applied the above formula so that the correct value could come

And, the same is to be considered