Mandolin produced 70,000 units and sold 50,000 units. Their unit selling price is $20 and they...
Mandolin produced 70,000 units and sold 50,000 units. Their unit selling price is $20 and they have variable unit production costs of $10, variable selling expenses of three dollars and fixed overhead of $10,000. Compute Mandolin's net income under variable costing.
Homework Answers
Mandolin's net income under variable costing = $340000
Explanation;
|
Income Statement (variable costing) |
||
|
Sales (50000 * $20) |
$1000000 |
|
|
Less: Variable costs of production; |
||
|
Units produced (70000 * $10) |
$700000 |
|
|
Cost of goods available for sale |
$700000 |
|
|
Less: Ending inventory (20000 * $10) |
($200000) |
|
|
Cost of goods sold |
($500000) |
|
|
Gross contribution margin |
$500000 |
|
|
Less: Variable selling expenses (50000 * $3) |
($150000) |
|
|
Contribution margin |
$350000 |
|
|
Less: Fixed overhead |
($10000) |
|
|
Net income |
$340000 |
|
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