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11 December, 16:50

Dapple Company incurred the following costs while producing 480 units: direct materials, $ 13 per unit; direct labor, $ 26 per unit; variable manufacturing overhead, $ 16 per unit; total fixed manufacturing overhead costs, $ 7 comma 680 ; variable selling and administrative costs, $ 2 per unit; total fixed selling and administrative costs, $ 4 comma 320. There are no beginning inventories. What is the operating income using variable costing if 430 units are sold for $ 160 each?

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  1. 11 December, 17:37
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    Operating Income $32290

    Explanation:

    The difference between the variable and absorption costing is that the fixed costs are treated as period costs in variable costing and as product costs in absorptioon costing. In variable costing all variable costs are treated as product costs.

    Dapple Company

    Income Statement

    Variable Costing

    Sales 430 units * $ 160 $ 68,800

    Less

    Variable Cost OF Goods Sold (23650)

    Direct materials, $ 13 per unit * 430 5590

    Direct labor, $ 26 per unit * 430 11180

    Variable Manufacturing

    Overhead, $ 16 per unit * 430 6880

    Less

    Variable selling and

    Administrative costs, $ 2 per unit * 430 (860)

    Contribution Margin 44290

    Less

    Total Fixed Manufacturing overhead costs, $ 7, 680 ;

    Total Fixed selling and administrative costs, $ 4,320

    Operating Income $32290
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