Question

Neef Corporation has provided the following data for its two most recent years of operation: Selling price per unit $ 84 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $ 12 Direct labor $ 5 Variable manufacturing overhead $ 4 Fixed manufacturing overhead per year $ 432,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 5 Fixed selling and administrative expense per year $ 61,000 Year 1 Year 2 Units in beginning inventory 0 3,000 Units produced 12,000 9,000 Units sold 9,000 10,000 Units in ending inventory 3,000 2,0000 The net operating income (loss) under variable costing in Year 2 is closest to:

Answer 1

Sales revenue		840000	=10000*84
Variable costs:
Direct materials	120000		=10000*12
Direct labor	50000		=10000*5
Variable manufacturing overhead	40000		=10000*4
Variable selling and administrative expense	50000	260000	=10000*5
Contribution margin		580000
Fixed costs:
Fixed manufacturing overhead	432000
Fixed selling and administrative expense	61000	493000
Net operating income (loss) under variable costing in Year 2		87000