Alvin Inc. planned and actually manufactured 200,000 units of its single product in 2014, its first year of operations. Variable manufacturing costs were $30 per unit of product produced. Planned and actual fixed manufacturing costs were $600,000, and fixed marketing and administrative costs totaled $400,000 in 2014. Alvin sold 120,000 units of product in 2014 at a selling price of $40 per unit. What is Alvin's 2014 operating income using variable costing?

Question

Business

Genesis Frost

1 February, 01:55

Alvin Inc. planned and actually manufactured 200,000 units of its single product in 2014, its first year of operations. Variable manufacturing costs were $30 per unit of product produced. Planned and actual fixed manufacturing costs were $600,000, and fixed marketing and administrative costs totaled $400,000 in 2014. Alvin sold 120,000 units of product in 2014 at a selling price of $40 per unit. What is Alvin's 2014 operating income using variable costing?

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Alisha Levy · Answer 1

operating income $200,000

Explanation:

$

Revenue (40*120,000) 4,800,000

less: Variable manufacturing cost ($30*120,000) (3,600,000)

Contribution 1,200,000.

Less fixed cost:

Manufacturing (600,000)

Marketing (400,000)

operating income 200,000

Operating income $200,000