Question

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of​ operation, 2,200 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month​ includes: Variable manufacturing costs $24.00 per unit Variable marketing costs $5.00 per unit Fixed manufacturing costs $13.00 per unit Administrative​ expenses, all fixed $21.00 per unit Ending​ inventories: Direct materials −0− WIP −0− Finished goods 400 units What is the operating income using variable​ costing?

Answer 1

Net operating profit= 57,800

Step-by-step explanation:

Giving the following information:

Selling price= $98

Units sold= 1,800

Variable manufacturing costs $24.00 per unit

Variable marketing costs $5.00 per unit

Fixed manufacturing costs $13.00 per unit

Administrative​ expenses, all fixed $21.00 per unit

First, we need to calculate the total fixed costs:

Total fixed manufacturing cost= 13*2,200= 28,600

Total administrative cost= 21*1,800= 37,800

Variable costing income statement:

Sales= 98*1,800= 176,400

Total variable cost= 1,800*(24 + 5)= (52,200)

Contribution margin= 124,200

Total fixed manufacturing cost= (28,600)

Total administrative cost= (37,800)

Net operating profit= 57,800