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3 June, 06:30

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?

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  1. 3 June, 08:31
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    operating income $200,000

    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
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