Question

QUESTION 46 The Heartlake Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Selling price per unit $8.50 Variable manufacturing costs per unit $1.87 Variable selling and administrative expenses per unit $4.75 Fixed manufacturing overhead (in total) $80,000 Fixed selling and administrative expenses (in total) $85,000 Units produced during the year 520,000 Units sold during year 150,000 Using variable costing, what is the operating income for last year? $117,000 $1,275,000 $447,000 $282,000

Answer 1

Correct answer-----------$117,000

Working

Sales	$ 1,275,000.00
Less: Variable Cost
Variable manufacturing costs (1.87 x 150000)	$      280,500.00
Variable selling and administrative expenses (4.75 x 150000)	$      712,500.00
Total Variable cost	$      993,000.00
Contribution Margin	$      282,000.00
Less: Fixed Cost
Fixed manufacturing Overheads	$        80,000.00
Fixed Selling and Administrative Expenses	$        85,000.00
Total Fixed cost	$      165,000.00
Net Income	$      117,000.00