Question

Green Company sells its product for $10900 per unit. Variable costs per unit are: manufacturing, $6500; and selling and administrative, $135. Fixed costs are: $50400 manufacturing overhead, and $60400 selling and administrative. There was no beginning inventory at 1/1/18. Production was 36 units per year in 2018–2020. Sales were 36 units in 2018, 32 units in 2019, and 40 units in 2020. Income under variable costing for 2020 is

$48280.

$54780.

$54200.

$59800.

Answer 1

The Answer is $ 59,800

Calculation:

Green Company
Variable Costing Income Statement
Particulars	Amount ($)
Sales Revenue [40*10900]	$      436,000
Less: Variable Costs
Variable Manufacturing Overhead [40*6500]	$      260,000
Variable Selling and Administrative Costs [40*135]	$           5,400
Contribution Margin[Sales - Variable Cost]	$      170,600
Less: Fixed Costs
Fixed Manufacturing Overhead	$        50,400
Fixed Selling and Administrative Costs	$        60,400
Net Operating Income [Contribution Margin-Fixed Cost]	$        59,800