Question

Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$	133
Units in beginning inventory		950
Units produced		8,850
Units sold		8,950
Units in ending inventory		850

Variable costs per unit:
Direct materials	$	29
Direct labor	$	46
Variable manufacturing overhead	$	10
Variable selling and administrative expense	$	20
Fixed costs:
Fixed manufacturing overhead	$	70,800
Fixed selling and administrative expense	$	164,200

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

What is the net operating income for the month under variable costing?

Answer 1

Sales		1190350	=8950*133
Variable expenses:
Variable cost of goods sold	760750		=8950*(29+46+10)
Variable selling and administrative expenses	179000		=8950*20
Total Variable expenses		939750
Contribution margin		250600
Fixed expenses:
Fixed manufacturing overhead	70800
Fixed selling and administrative expenses	164200
Total Fixed expenses		235000
Net operatimg income(loss)		15600
Net operating income for the month under variable costing $15600