Question

XYZ Inc. sells a single product for $10 per unit. Variable production costs are $5 per unit. Fixed overhead costs amount $10,000 per month. Variable selling costs are $2 per unit. Fixed selling costs are $5,000 per month. Last month, the company produced 10,000 units and sold 8,000 units.

What were XYZ's total selling costs incurred last period?

What was XYZ's net income last month?

What is XYZ's contribution margin per unit?

What were XYZ's total production costs incurred last period?

Answer 1

Total Selling Costs incurred Variable Selling Costs 8000 * $ 2 Fixed Selling cost Total Selling Costs $ $ $ 16,000 5,000 21,000 Net Income under Variable Costing Approrach $ 80,000 Sales 8000 * $ 10 Less : Variable Costs Production costs 8000* $5 Selling Costs 8000* $2 Contribution Margin Less : Fixed Costs Fixed overhead cost Fixed Selling Costs Net Income $(40,000) $(16,000) $ $ (56,000)| 24,000 $(10,000) $ (5,000) $ $ (15,000) 9,000 Note : Variable costing approach used while calculating net Income

Contribution Margin Per Unit $ 10 Selling Price Less : Variable Production Cost Variable Selling Cost Contribution Margin per Unit $ $ $ (5) (2) 3 Total Production Costs Incurred Variable Production Costs Fixed Production Costs Total Production Costs 10000 *$ 5 $ $ $ 50,000 10,000 60,000