Question

Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 126 Units in beginning inventory 0 Units produced 1,900 Units sold 1,800 Units in ending inventory 100 Variable costs per unit: Direct materials $ 49 Direct labor $ 28 Variable manufacturing overhead $ 5 Variable selling and administrative expense $ 11 Fixed costs: Fixed manufacturing overhead $ 32,300 Fixed selling and administrative expense $ 23,400 What is the net operating income for the month under variable costing

Answer 1

Answer:

$3,700

Explanation:

Units Reconciliation

Opening Stock                 0

Add Production            1,900

Available for Sale        1,900

Less Sales                  (1,800)

Closing Stock                 100

Unit Product Cost - Variable Costing

Total Cost = $ 49 + $ 28 + $ 5

                 = $82

Income Statement - Variable Costing

Sales                                                                                               $226,800

Less Cost of Sales

Opening Stock                                                                $0

Add Cost of goods manufactured ($82 x  1,900)   $155,800

Less Closing Stock ($82 x 100)                                 ($8,200)     ($147,600)

Contribution                                                                                     $79,200

Less Expenses

Fixed manufacturing overhead                                                     ($32,300)

Variable selling and administrative expense ($ 11 x 1,800)         ($19,800)

Fixed selling and administrative expense                                   ($23,400)

Net Income                                                                                        $3,700

Conclusion

The net operating income for the month under variable costing is  $3,700