A manufacturing company has provided the following data concerning its most rece

Question

A manufacturing company has provided the following data concerning its most recent month of operations:

Selling price  $126

Units in beginning inventory 0
Units produced 3,100
Units sold 3,000
Units in ending inventory 100

Variable costs per unit:
Direct materials $22
Direct labor 43
Variable manufacturing overhead 3
Variable selling and administrative 10

Fixed costs:
Fixed manufacturing overhead $89,900
Fixed selling and adminstrative $42,000

1. What is the net income for the month under variable costing?

a. $15,000
b. $12,100
c. $2,900
d. $5,300

Explanation / Answer

so answer is b. $12,100

Sales (3000*126) 378000

Less Variable Costs

Direct materials (3000*22) 66000

Direct labor (3000*43) 129000

Variable manufacturing overhead (3000*3) 9000

Variable selling and administrative (3000*10) 30000

Contribution 144000

Less Fixed Costs

Fixed manufacturing overhead 89900

Fixed selling and administrative 42000

Net Income 12100

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