Question

During the most recent year, Osterman Company had the following data:

Units in beginning inventory	---
Units produced	11,600
Units sold ($48 per unit)	9,000
Variable costs per unit:
Direct materials	$9
Direct labor	$7
Variable overhead	$3
Fixed costs:
Fixed overhead per unit produced	$5
Fixed selling and administrative expenses	$137,500

1. Calculate the cost of goods sold under variable costing.

The cost of goods sold under the variable costing method is ----------------------

2. Prepare an income statement using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement.

Question not attempted.

Score: 0/66

Osterman Company

Variable-Costing Income Statement

For the Most Recent Year

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Answer 1

Answer

Requirement - 1

Cost of Goods sold under Variable costing include ONLY variable manufacturing expense

9000 units sold x ($9 material + $ 7 labor + $ 3 overhead)

9000 x 19

$171,000

Requirement -  2
Osterman Company
Income Statement under Variable Costing
For the Most Recent Year
Sales revenue	[9000 units x $ 48]	$     432,000
Less: Variable cost	[9000 units x $ 19]	$     171,000
Contribution margin		$     261,000
Less: Fixed cost
Fixed overhead [11600 units x $5]	$                   58,000
Fixed selling & admin expense	$                 137,500	$     195,500
Operating Income		$       65,500