Question

Kevin company manufactures and sells one product. The following information pertains to the company's first year of operations:

Selling price per unit	$100
Variable costs per unit:
Manufacturing:
Direct materials	$8
Direct labor	$20
Variable manufacturing overhead	$11
Variable selling and administrative expense	$18
Fixed costs per year:
Fixed manufacturing overhead	$48,000
Selling and administrative expense	$65,700

Production	6,000 units
Sales	4,500 units

Q:) What is net operating income under variable costing in the first year?

A:) $ ________?

Answer 1

Answer--------------$79,800

Working

Variable costing income statement
Sales		$   450,000.00
Variable Cost
Variable cost of Goods Sold	$   175,500.00*
Variable Selling & administrative	$      81,000.00
Total variable cost		$   256,500.00
Contribution margin		$   193,500.00
Fixed Costs:
Fixed Cost of Goods Sold	$      48,000.00
Fixed Selling & Administrative	$      65,700.00
Total Fixed Cost		$   113,700.00
Net Income		$      79,800.00

*(8+20+11)*4500