Final answer:
Here is the variable-costing income statement for Ivanhoe Corp. in 2022:
- Sales revenue: 39,400 units x $16 per unit = $624,400
- Variable manufacturing costs: 39,400 units x $5 per unit = $197,000
- Variable selling and administrative costs: 39,400 units x $3 per unit = $118,200
- Total variable costs: $197,000 + $118,200 = $315,200
- Contribution margin: $624,400 - $315,200 = $309,200
- Fixed manufacturing overhead: $78,800
- Fixed selling and administrative expenses: $18,800
- Total fixed costs: $78,800 + $18,800 = $97,600
- Net income (before taxes): $309,200 - $97,600 = $211,600
Step-by-step explanation:
Based on the given variable-costing income statement for Ivanhoe Corp. in 2022, we can analyze the various components to understand the company's financial performance.
1. Sales revenue: Ivanhoe Corp. sold 39,400 units at a price of $16 per unit, resulting in total sales revenue of $624,400. This represents the total amount of money generated from the sales of the company's products.
2. Variable manufacturing costs: For each unit sold, Ivanhoe Corp. incurs variable manufacturing costs of $5 per unit. Therefore, the total variable manufacturing costs for 39,400 units amount to $197,000. These costs vary based on the level of production.
3. Variable selling and administrative costs: Ivanhoe Corp. incurs variable selling and administrative costs of $3 per unit for each unit sold. The total variable selling and administrative costs for 39,400 units amount to $118,200. These costs are directly associated with the sales and administration functions and vary based on the level of production.
4. Total variable costs: The total variable costs for Ivanhoe Corp. are the sum of variable manufacturing costs and variable selling and administrative costs. In this case, the total variable costs amount to $315,200 ($197,000 + $118,200).
5. Contribution margin: The contribution margin is the difference between sales revenue and total variable costs. In this case, the contribution margin for Ivanhoe Corp. is $309,200 ($624,400 - $315,200). It represents the amount of money available to cover fixed costs and contribute to the company's profitability.
6. Fixed manufacturing overhead: Ivanhoe Corp. incurs fixed manufacturing overhead costs of $78,800. These costs do not vary with the level of production and remain constant.
7. Fixed selling and administrative expenses: Ivanhoe Corp. incurs fixed selling and administrative expenses of $18,800. Similar to fixed manufacturing overhead costs, these expenses do not vary with the level of production and remain constant.
8. Total fixed costs: The total fixed costs for Ivanhoe Corp. are the sum of fixed manufacturing overhead and fixed selling and administrative expenses. In this case, the total fixed costs amount to $97,600 ($78,800 + $18,800).
9. Net income (before taxes): The net income before taxes is calculated by subtracting the total fixed costs from the contribution margin. In this case, the net income before taxes for Ivanhoe Corp. is $211,600 ($309,200 - $97,600). This represents the company's profitability before accounting for taxes.