Nat Corporation has just completed its first year of operation. Below are select
ID: 2480450 • Letter: N
Question
Nat Corporation has just completed its first year of operation. Below are selected data;
Number of units produced
10,000
Number of units sold
8,000
Selling price per unit
$30.00
Cost per unit:
Direct materials
$3.00
Direct labor
5.00
Variable overhead
1.00
Variable selling expenses
2.00
Fixed expenses:
Fixed overhead
$40,000
Fixed selling expenses
30,000
The operating income using variable costing is
Number of units produced
10,000
Number of units sold
8,000
Selling price per unit
$30.00
Cost per unit:
Direct materials
$3.00
Direct labor
5.00
Variable overhead
1.00
Variable selling expenses
2.00
Fixed expenses:
Fixed overhead
$40,000
Fixed selling expenses
30,000
Explanation / Answer
Operating Income Using variable Costing is Unit Rate per Unit Amount Sales 8,000 30 2,40,000 Less:- Variable Cost Material Cost 8,000 3 24,000 Direct Labour Cost 8,000 5 40,000 Variable Overhead 8,000 1 8,000 Variable Selling Exp 8,000 2 16,000 Variable Cost 88,000 Fixed Expenes - Operating Income 1,52,000 * IN Variable Costing method, Fixed Cost will not be allocated to the product.
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