Oak Mart, a producer of solid oak tables, reports the following data from its se

Question

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

Sales price per unit $ 300 per unit Units produced this year 105,000 units Units sold this year 108,750 units Units in beginning-year inventory 3,750 units Beginning inventory costs Variable (3,750 units × $130) $ 487,500 Fixed (3,750 units × $75) 281,250 Total $ 768,750 Manufacturing costs this year Direct materials $ 40 per unit Direct labor $ 68 per unit Overhead costs this year Variable overhead $ 3,200,000 Fixed overhead $ 7,000,000 Selling and administrative costs this year Variable $ 1,500,000 Fixed 4,000,000 Variable Costing Income Statement Sales Beginning inventory: Manufacturing costs this year Net income (loss)...

Explanation / Answer

Answer:-

Oak Mart Income statement using variable costing Particulars Amount $ Variable Manufaturing cost:- Direct material 105000 units *$40 per unit 4200000 Direct Labor 105000 units *68 per unit 7140000 Overhead cost 3200000 Total 14540000 Add: Opening stock Less: Closing stock Variable 487500 Variable cost of goods sold 14052500 Variable selling & administaion cost 1500000 Variable cost of sales (a) 15552500 Sales (b) 108750 units *$300 per unit 32625000 Contribution (b-a) 17072500 Less:- Fixed cost:- Beginning cost 281250 Overhead cost 7000000 Selling & administaion cost 4000000 Net Income/ Net profit 5791250

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