Jones Company incurred the following costs while producing 100 chairs: Units produced 100 chairs Direct materials $10 per unit Direct labor 15 per unit Variable manufacturing overhead 3 per unit Total fixed manufacturing overhead 2,000 Variable selling and administrative 4 per unit Fixed selling and administrative 3,000 What is operating income using variable costing if 90 units were sold for $150 each?

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29 June, 11:37

Jones Company incurred the following costs while producing 100 chairs: Units produced 100 chairs Direct materials $10 per unit Direct labor 15 per unit Variable manufacturing overhead 3 per unit Total fixed manufacturing overhead 2,000 Variable selling and administrative 4 per unit Fixed selling and administrative 3,000 What is operating income using variable costing if 90 units were sold for $150 each?

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Elliot Mcbride · Answer 1

Operating Income under Variable Costing = $5,620

Explanation:

Jones Company

Variable costing income statement

For the month of June 30, 20YY

Sales (90 units * $150) $13,500

Less: Variable expenses

Direct materials (90 units * $10) = $900

Direct labor (90 units * $15) = $1,350

Variable manufacturing overhead (90 units * $3) = $270

Total variable expenses ($2,520)

Variable manufacturing margin $10,980

Less: Variable selling and administrative (90*$4) $360

Contribution Margin $10,620

Less: Fixed Expenses

Manufacturing overhead $2,000

Selling and administrative $3,000

Total fixed expenses $ (5,000)

Net Operating Income = $5,620