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For the year ended December 31, 20x5, Davis Corporation has the following records of its costs:...

For the year ended December 31, 20x5, Davis Corporation has the following records of its costs: Direct materials used $580352 Direct labour 166229 Variable manufacturing overhead 78568 Fixed manufacturing overhead 101036 Selling and administrative costs (fixed) 144468 Davis produced 123494 units and sold 106947 units at $14 in 20x6. There were no beginning inventories. If Davis uses variable costing, what is the operating income for the year ended December 31, 20x6? Select one: a. $426605 b. $537167 c. $517167 d. $550705

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Answer #1
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Total variable cost of production =580352+166229+78568 $           825,149
Variable cost of goods sold = 825149*106947/123494 $           714,587
Sales = 106947*14 $        1,497,258
Contribution margin $           782,671
Less: Fixed costs = 101036+144468 $           245,504
Operating income $           537,167
Answer: Option [B] $537,167
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