Question

Saved The following information is available for Barnes Company for the fiscal year ended December 31: Beginning finished goods inventory in units Units produced Units sold Sales Materials cost Variable conversion cost used Fixed manufacturing cost Indirect operating costs (fixed) 7,800 5,500 $ 1,320,000 $ 156,000 $ 78,000 $ 702,000 $ 87,500 The variable costing operating income is:

Answer 1

Operating income = $365,000

Working

Variable costing Income statement
Sales		$ 1,320,000
Less: Variable costs
Direct material used (156000/7800 x 5500)	$ 110,000
Variable conversion cost (78000/7800 x 5500)	$ 55,000
Total Variable cost		$ 165,000
Contribution margin		$ 1,155,000
Less: Fixed Costs
Fixed manufacturing cost	$ 702,000
Indirect operating cost	$ 87,500
Total Fixed Costs		$ 789,500
Net Income		$ 365,500

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