Hatcher, Company has collected the following data for October (there are no beginning inventories) : Units produced and sold 500 units Sales price $ 390 per unit Direct materials 62 per unit Direct labor 65 per unit Variable manufacturing overhead 28 per unit Fixed manufacturing overhead 8,100 per month Variable selling and administrative costs 17 per unit Fixed selling and administrative costs 3,800 per month If an income statement were prepared using variable costing what would be the end result (Operating Income or Loss)

Question

Business

Deborah Phelps

4 November, 07:01

Hatcher, Company has collected the following data for October (there are no beginning inventories) : Units produced and sold 500 units Sales price $ 390 per unit Direct materials 62 per unit Direct labor 65 per unit Variable manufacturing overhead 28 per unit Fixed manufacturing overhead 8,100 per month Variable selling and administrative costs 17 per unit Fixed selling and administrative costs 3,800 per month If an income statement were prepared using variable costing what would be the end result (Operating Income or Loss)

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Anderson Patterson · Answer 1

Net Income: 97, 100

Explanation:

Sales revenue 500 units x $390 each 195,000

Variable cost 500 units x $172 each (A) (86, 000)

Contribution Margin 109, 000

Fixed Cost FMO 8,100 + F S&A 3,800 (11, 900)

Net Income 97, 100

(A) Sum of all variable cost

(Materials 62 + Labor 65 + Var overhead 28 + var S&A 17 = total variable = 172)

Under variable cost, we will sum all the variable cost, and subtract from sales revenue. This will be the contribution margin of the business. Then we subtract the fixed cost for the net income