Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced
Fantastic news! We've Found the answer you've been seeking!
Question:
Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced 20,000 units and sold 18,000 units. At year-end the company reported the following income statement using absorption costing:
Sales (18,000 × $30) | $540,000 | ||
Cost of goods sold (18,000 × $14) | 252,000 | ||
Gross margin | $288,000 | ||
Selling and administrative expenses | 90,000 | ||
Net income | $198,000 |
Production costs per unit total $14, which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced). 60% of total selling and administrative expenses are variable. Compute net income under variable costing:
a. $307,800
b. $198,000
c. $195,800
d. $288,000
e. $220,000
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133255584
4th Edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date: