Question

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?

Answer 1

operating income $200,000

Step-by-step 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