A company produces a single product. Last year, fixed manufacturing overhead was $30,000, variable production costs were $48,000, fixed selling and administration costs were $20,000, and variable selling administrative expenses were $9,600. There was no beginning inventory. During the year, 3,000 units were produced and 2,400 units were sold at a price of $40 per unit. Under variable costing, net operating income would be

Question

Alyvia Cuevas

Business

30 July, 17:15

A company produces a single product. Last year, fixed manufacturing overhead was $30,000, variable production costs were $48,000, fixed selling and administration costs were $20,000, and variable selling administrative expenses were $9,600. There was no beginning inventory. During the year, 3,000 units were produced and 2,400 units were sold at a price of $40 per unit. Under variable costing, net operating income would be

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Tyrese Rivas · Answer 1

Net operating income = (2,000)

Explanation:

Giving the following information:

fixed manufacturing overhead was $30,000

variable production costs were $48,000

fixed selling and administration costs were $20,000

variable selling administrative expenses were $9,600.

During the year, 3,000 units were produced and 2,400 units were sold for $40 per unit.

First, we need to calculate the unitary product variable cost:

Unitary product cost = 48,000/3,000 = $16

Income statement:

Sales = 2,400*40 = 96,000

Total variable cost = (2,400*16) + 9,600 = (48,000)

Contribution margin = 48,000

fixed manufacturing overhead = (30,000)

fixed selling and administration costs were = (20,000)

Net operating income = (2,000)