Timmer Corporation just started business in January. There were no beginning inv

Question

Timmer Corporation just started business in January. There were no beginning inventories. During the year, it manufactured 12,000 units of product, and sold 8,000 units. The selling price of each unit was $26. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $4 per unit. Fixed manufacturing costs were $36,000, and fixed selling and administrative costs were $8,200.

What would Timmer's net income be for the year using variable costing?

a.$79,840

b.$144,000

c.$99,800

d.$108,000

Explanation / Answer

The correct answer is c. $ 99,800

Note :

Units 8,000 Selling Price  ( $ 26 *8,000) 2,08,000 Less : Variable Cost ( $ 4 *8,000) 32,000 Less : Variable Selling and Administrative Cost ( $ 4 *8,000) 32,000 Contribution Margin 1,44,000 Less : fixed Cost 36,000 Less :Fixed Selling and Administrative Cost 8,200 Net Income 99,800

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