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Red and White Company reported the following monthly data: Units produced 3,300 units Sales price $ 38 per unit Direct materials $ 5 per unit Direct labor $ 6 per unit Variable overhead $ 7 per unit Fixed overhead $ 8,910 in total What is Red and White's net income under variable costing if 1,110 units are sold and operating expenses are $15,000

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Answer:

Net operating income= -$1,710

Explanation:

First, we need to calculate the unitary variable cost:

Unitary variable cost= 5 + 6 + 7= $18

Variable costing income statement:

Sales= 1,110*38= 42,180

Total variable cost= 1,110*18= (19,980)

Total contribution margin= 22,200

Total fixed overhead cost= (8,910)

Operating expenses= (15,000)

Net operating income= -$1,710