Badoni Corporation has provided the following data for its two most recent years
ID: 2593378 • Letter: B
Question
Badoni Corporation has provided the following data for its two most recent years of operation:
The net operating income (loss) under variable costing in Year 2 is closest to:
$180,000
$195,000
$59,000
$7,000
Selling price per unit $ 85 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $ 10 Direct labor $ 6 Variable manufacturing overhead $ 4 Fixed manufacturing overhead per year $ 96,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 5 Fixed selling and administrative expense per year $ 77,000Explanation / Answer
Net Opering Income Under Variable Costing $ 7000 Working as below Variable Costing Sales (3000 units*85) $255,000 Variable Cost of goods Sold Beginning Inventory (1000*20) $20,000 Production Cost ( 6000*20) $120,000 Cost of Goods Avilable For Sales $140,000 Less: Ending inventory (4000*20) $80,000 Variable Cost of goods sold $60,000 $60,000 Gross Contribution margin $195,000 Less: Variable Selling and administrartive Expenses $15,000 Contrbution margin $180,000 Less: Fixed Cost Fixed manufacturing Overhead $96,000 Fixed Selling & Administrative overhead $77,000 Net Operating income $7,000
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