Timmer Corporation just started business in January. There were no beginning inv

Question

Timmer Corporation just started business in January. There were no beginning inventories. During the year, it manufactured 11,200 units of product and sold 8,300 units. The selling price of each unit was $28. Variable manufacturing costs were $5 per unit, and variable selling and administrative costs were $3 per unit. Fixed manufacturing costs were $33,600 and fixed selling and administrative costs were $7,900.

What would Timmer's net income be for the year using variable costing?

a.$166,000

b.$99,600

c.$124,500

d.$132,400

Explanation / Answer

Income Statement Sales (8300*28)        2,32,400 Less Variable Cost Variable Manufacturing Cost (8300*$5)        41,500 Variable Selling & Administrative Cost (8300*$3)        24,900            66,400 Contribution        1,66,000 Less: Fixed Cost Fixed Manufactruing Cost        33,600 Fixed selling expense           7,900            41,500 Net income        1,24,500 Hence , c. 124500 is correct Answer

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