Question

Company sells its product for $11700 per unit. Variable costs per unit are: manufacturing, $5500; and selling and administrative, $135. Fixed costs are: $30000 manufacturing overhead, and $40000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 20 units per year in 2018–2020. Sales were 20 units in 2018, 16 units in 2019, and 24 units in 2020. Income under variable costing for 2019 is

$27040.

$33040.

$35200.

$60080.

Answer 1

The Answer is $ 27,040

Working:

Variable Costing Income Statement
Particulars	Amount ($)	Amount ($)
Sales Revenue [16*11700]		$      187,200
Less: Variable Costs
Variable Manufacturing Costs [16*5500]	$        88,000
Variable Selling and Administrative Costs [16*135]	$           2,160	$        90,160
Contribution Margin[Sales - Variable Cost]		$        97,040
Less: Fixed Costs
Fixed Manufacturing Overhead	$        30,000
Fixed Selling and Administrative Costs	$        40,000
		$        70,000
Net Operating Income [Contribution Margin-Fixed Cost]		$        27,040