Question

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 $3 and fixed overhead of $10,000. Compute Mandolin's net income under variable costing. Multiple choice question. $340,000 $350,000 $450,000 $500,000

Answer 1

Net Income = $340000

Step-by-step explanation:

Given the total unit produced = 70000

Number of units sold = 50000

Selling price = $20

Variable cost of production = $10

Variable selling expense = $3

Fixed overhead = $10000

Net Income = (50000 x 20) - (50000 x 10) - (50000 x 3) - 10000

Net Income = $340000

Answer 2

$340,000

Step-by-step explanation:

The computation of the net income under variable costing is shown below;

Sales (50000 × $20) $1,000,000

Less: Variable costs of production;

Units produced (70000 × $10) $700,000

Cost of goods available for sale $700,000

Less: Ending inventory (20000 × $10) ($200,000)

Cost of goods sold ($500,000)

Gross contribution margin $500,000

Less: Variable selling expenses (50000 × $3) ($150000)

Contribution margin $350,000

Less: Fixed overhead ($10,000)

Net income $340,000