Smith Company produces and sells one product for $40 per unit. The company has no beginning inventories.

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Smith Company produces and sells one product for $40 per unit. The company has no beginning inventories. Its variable manufacturing cost per unit is $18 and the variable selling and administrative expense per unit is $4. The fixed manufacturing overhead and fixed selling and administrative expense total $80,000 and

$20,000, respectively. If Smith Company produces 8,000 units and sells 7,500 units during the year, then its net operating income under variable costing would be

a. $65,000

b. $41,250

c. $40,000

d. $35,000

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ISE Introduction To Managerial Accounting

ISBN: 9781260091755

8th Edition

Authors: Peter Brewer, Ray Garrison, Eric Noreen

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