Question

In: Accounting

Testing Inc. had the following amounts: Direct materials $8 per unit Direct Labor $15 per unit...

Testing Inc. had the following amounts:

Direct materials $8 per unit

Direct Labor $15 per unit

Variable overhead $5 per unit

Fixed overhead $90,000

Variable selling expenses $3 per unit

Fixed selling and admin. expenses $150,000

75,000 units produced

60,000 units sold at $40 each

Calculate the VARIABLE product cost per unit and prepare a Contribution Margin Income Statement under Variable Costing in order to fill in the rest of the information. (Remember you can submit your calculations for possible partial credit.)

Variable product cost per unit $ =

Total Sales in dollars $ =

Contribution Margin    $ =

Net Income $ =

Solutions

Expert Solution

Variable Cost per Unit
Direct Material $                8.00
Direct Labor $             15.00
Variable Overhead $                5.00
Variable Selling & Administerative cost $                3.00
Total Variable cost per unit $             31.00
Testing Inc.
Variable Costing Income Statement
Sales=(60000*$40)=(A) $ 24,00,000.00
Less: Variable Cost
Direct Material=(60000*$8) $ 4,80,000.00
Direct Labor=(60000*$15) $ 9,00,000.00
Variable Overhead Cost=(60000*$5) $ 3,00,000.00
Variable Selling & Administerative Expenses=(60000*$3) $ 1,80,000.00
Total Variable Cost=(B) $ 18,60,000.00
Contribution Margin=(C )=(A)-(B) $    5,40,000.00
Less: Fixed Expenses
Fixed Selling & Administerative Expenses $     90,000.00
Fixed Overhead Cost $ 1,50,000.00
Total Fixed Expenses=(D) $    2,40,000.00
Net Income=(C)-D) $    3,00,000.00

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